2006 Roaring Forties Customers Who Lost a Bundle....

Ron Earp

Admin
To make a long story or inquiry short, are there any US tax folks on the forum who might offer some insight as to any tax deductions that can be taken on such a loss?

Clearly there are a lot of us who lost money in the Roaring Forties fiasco of 2006 and I'm interested to learn if there are any claims that can be made. I'm not sure how the government would look at this sort of thing - basically consumers bought a product from a company, via US agents, and the company went bankrupt taking all the deposits and payments with it. Not sure if it is "claimable" but I'm interested to hear some informed opinions. After all, tax time is looming......

Still a shame. Over $500,000 USD went missing between the US and UK and not a cent returned as far as I know, and the cars/chassis are nowhere to be found that I've heard of (recently that is).

Ron
 
Ron,
I'd have to check with my mother, she's a damn good H&R Block tax preparer, and also does our company books. A few years ago, my father parked his North American Navion into the North Carolina trees just outside Raleigh Duram. He didn't have hull insurance and the plane was a write off. He was able to write the complete aircraft off his taxes. They are somewhat similar in nature, and I'd think some sort of write off is in order here. I just thought, you might have seen the plane crash on the news down there. It was at the Triple W airport. Happened in June or July of '04 or '05. Anyway, I'll try and get some news for you folks.
Jim
 

Ron Earp

Admin
Hey Jim,

I'm sorry to hear about your dad at Triple W. I've flown in there a bunch of times, for the first time when I was training in about 2003/2004 for a "short narrow strip" training. It is fairly narrow, has tall trees at either end, and is not in that great a shape. I take it your dad was okay? I sure hope so.

I do member a plane going down around that area but there were no details on the news and I don't recall a NTSB report in the pilot mags, but they only cover probably 10% of what is out there. Small world for sure. Triple W is probably 35 miles from me as the crow files, maybe a 50 min drive tops. Was your dad on business or pleasure?

I did fly in there one time and had one flap deploy and the other not deploy at all. I caught it on downwind though and retracted both, luckily the deployed one came back up. I then did the no flap landing which was no big deal. Spooked me a little though because I was alone and still on a Student Pilot ticket with excursions to local area airports allowed. Worked fine after that.

Thanks for any insight that your mom can provide. I've heard conflicting reports about what can be done with a loss like that - from nothing to completely deductable.

Ron
 

Ron Earp

Admin
Hey Chuck,

I'm not sure what that means on the passive stuff. I'm not so good with accounting information, hence I have a Minister of Domestic Affairs who handles that for me.

One member wrote me and explained that he thought you could deduct such a loss but on that part of the loss which is greater than 10% of your income.

So, if you lost $25k in the deal, and make $50k a year, then you could deduct $20k. 10% of your income is $5k, take $5k off of $25k leaving $20k you can deduct.

Does that sound like it makes sense?

Ron
 
Yea, Dad's o.k.. He came home the next weekend and flew his piper instead. Has two other navions anyway. The FAA called it pilot error. The engine quit on long final and he parked it between two big trees. FAA found nothing wrong with the engine. Once we got it home. Dad found the metal transfer fuel line from the Aux. tank was partially plugged and as luck would have it, fuel starvation occured on long final. Blamo! Mom was with him. Few cracked ribs for her, and cut forhead for him. The inspector said any plane other thank a Mooney or Navion, and they wouldn't be here today. I'll pick my mothers brain today.
 

Alex Hirsbrunner

Lifetime Supporter
Hi Jim,

That creepy comment to Ron was from me :) based on the below info in turbo tax. I was not able to claim a deduction this year for other reasons, but I did plan to pursue this with a tax attorney based on the TurboTax FAQ for next year's taxes. So I too am very interested in anything folks have to say on this topic.

Perhaps "purchased over the internet" has a more precise definition, but I think our RF transactions were along the lines of an ebay purchase with a payment by check via USPS.

Best Regards,

Al
 

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O.K. spoke with my tax guru mother. Probably not a lot of help, but first she said you'll have to prove that it's unrecoverable funds. You shouldn't have too much trouble there. Second, and she's not sure of this as she doesn't have time to research it, but you can only take certain loss based on a percentage of your adjusted gross income. She's shooting from the hip, but that's how it worked out for my fathers lost bird. You'll still need to talk to a tax attorney to be sure of this, or perhaps a good CPA. Sorry I couldn't be of more help.
 
I am no tax expert. However it would seem to me that you could make a case that you loaned Roaring Forties a sum of money that was secured by the promised delivery of a GT by a certain time. GT not delivered and RF declared bankrupt in court of law. Hence you have a bad debt or a loan not repaid that should be deductible as such.
 

Dutton

Lifetime Supporter
Fellow RF Mates,

I posed Rons' question to my son, Matthew, who is now an associate with Clark Nuber PS, a CPA firm in Bellevue, WA. Matt is a pretty sharp cookie and was among the 'first tier' job candidates who was offered a position almost a year before he graduated.

His comment "...done with criminal intent" is, based on what I've learned in the time since, where every depositor with RF falls... remember the endless stories about cars soon to be shipped, cars being built, etc?

The text of Matt's message follows; his reference to 4684 was a pdf he filled out as an example. Just as in March of 2006, each one of us is ultimately on our own so be sure you get tax advice you can trust.

Best to all,

T.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

"Hey Dad –

I just spoke with some fellow tax preparers about your situation and came to the conclusion that you might be able to deduct the deposit amount as some sort of “investment loss” or “casualty and theft loss” but you may be pushing it. Given that the money was paid willingly, it can’t necessarily be considered theft – however “theft losses are deductible as casualty losses if they result from acts illegal under state law and done with criminal intent.”

Not sure how much this helps – but it’s something. Let me know if you have any follow up questions and hopefully I can get them answered for you.

I’ve attached Form 4684 – the casualty and loss worksheet – which flows to Line 19 on your 1040 (I think). The only issue you may have with deducting the amount is proving you actually had a basis in the property (deposit/car) when it was stolen, that is, if the auditors come knocking on your door.

-Matt"
 

Ron Earp

Admin
His comment "...done with criminal intent" is, based on what I've learned in the time since, where every depositor with RF falls... remember the endless stories about cars soon to be shipped, cars being built, etc?

Thanks for looking into that, much appreciated. I don't think the criminal intent would be hard to prove with all the lines fed customers from December to March and it is all documented on this server as well as many Private Messages and emails.

I have heard the Australian equilvalent to our security commission is not investigating Robert Logan any more, so he is basically free. He might be free from that law but my mom always said what comes around goes around....

Ron
 
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