New rulesw for Ponzi theft losses

The IRS has provided guidance for claimin theft losses from any Ponzi Scheme (Rev. Rul. 2009-9; Rev. Proc. 2009-20. In the case of the Madoff losses, I have asked clients to consider not filing any claim against the bankruptcy estate because the recovery is likely to be small, and more can be gained from the net operating loss carrybacks that will get large refunds for the last two years. In shore, there is a larger financial benefit by getting refunds for the past two years. Note that the statute of limitations for refunds is two years. That money is lost if you wait for recovery from the bankruptcy estate. There appears to be lots of people caught up in Ponzi schemes. The IRS will always audit the investors in Ponzi schemes since their tax returns are invariably wrong. Unfortunately, there are still ongoing Ponzi schemes that have surfaced, other than the Madoff ripoff.


The IRS has issued guidance addressing the tax treatment of losses criminally fraudulent investment arrangements in the form of "Ponzi" schemes. The guidance provides that investors in such schemes will be entitled to claim a theft loss under Code Sec. 165, rather than a capital loss, because the perpetrators of such fraudulent schemes actually deprive investors of money by criminal acts. The loss is deductible under Code Sec. 165(c)(2) as a loss on a transaction entered into for profit, and it is not subject to the personal loss limitations under Code Sec. 165(h), or the limits on itemized deductions under Code Secs. 67 and 68.

Rev. Rul. 2009-9
The theft loss is deductible in the year it is discovered, provided that it is not covered by a claim for reimbursement, or other recovery as to which the investor has a reasonable prospect of recovery. To the extent that an investor's deduction is reduced by such a claim, recoveries in later tax years are not includible in the investor's income. However, if the investor recovers a greater amount in a later year, or an amount that initially was not covered by a claim to which there was a reasonable prospect of recovery, the recovery is includible in the investor's gross income in the later tax year, to the extent that the initial deduction reduced the investor's tax liability.

The amount of the theft loss deduction includes the amount invested in the scheme, less any amounts withdrawn, reimbursements, and claims as to which there is a reasonable prospect of recovery. The deductible amount also includes any fictitious income that was reported to the investor in years prior to the discovery of the theft that was included in the investor's gross income, and reinvested in the scheme.

To the extent an investor's theft loss deduction creates or increases a net operating loss in the year the loss is deducted, the investor may carry back up to three years and forward up to 20 years the portion of the net operating loss attributable to the theft loss. If the loss is an applicable 2008 net operating loss, an eligible small business can elect either a three-, four-, or five-year net operating loss carryback under Code Sec. 172(b)(1)(H).

The theft loss deduction does not qualify for the alternative computation of tax under Code Sec. 1341 for the restoration of an amount held under a claim of right because the deduction does not arise from the investor's obligation to restore income. Further, the theft loss does not qualify for the application of the mitigation provisions under Code Secs. 1311 through 1314 to adjust tax liability in years that are otherwise barred by the period of limitations from filing a claim for refund under Code Sec. 6511.

The theft loss deduction for losses on an investment in a Ponzi scheme is not taken into account in determining whether a transaction is a loss transaction for which there would be a disclosure obligation under Reg. §1.6011-4.

Rev. Proc. 2009-20
The IRS has provided a safe harbor for taxpayers to enable them to deduct losses from fraudulent investment schemes as theft losses. The new procedure also provides guidance for taxpayers choosing not to use the safe harbor, but who plan to deduct investment fraud losses under the theft loss provisions of Code Sec. 165. The procedure applies to investment fraud losses discovered in tax years after 2007.

Background. Since Ponzi schemes produce no real gains, when a large number of investors try to withdraw funds at the same time (e.g., when the economy takes a downturn), the Ponzi scheme falls apart because there is not enough new money being paid in by new investors to cover the withdrawals of existing investors. Taxpayers may not be aware of a fraudulent investment loss during the year in which the loss occurred, and it may be difficult for taxpayers to prove how much income reported from the fraudulent arrangement in prior years was in fact fictitious. The safe harbor is intended to help cheated investors gain some relief by providing a relatively straightforward method to calculate and deduct losses from investment fraud.

Requirements. Taxpayers can rely on the safe harbor to deduct losses from fraudulent investment schemes as theft losses only if certain requirements and circumstances are satisfied:

Specified fraudulent arrangement. The loss must be from a "specified fraudulent arrangement," which generally is a Ponzi scheme that takes cash or other assets from investors, purports to earn income for investors, reports fictitious income, makes any payments from funds contributed by other investors and not from bona fide earnings, and appropriates investors' cash or other assets.

Qualified loss. The loss must be a "qualified loss" resulting from a specified fraudulent arrangement of which the "lead figure" in charge of the scheme was charged under state or federal law with committing fraud, embezzlement, or other similar crime, that, if proven, would meet the definition of theft under Code Sec. 165; or the lead figure was the subject of a state or federal criminal complaint for fraud, embezzlement, or other similar crime, and either he admitted guilt, or the assets held by the fraudulent arrangement were frozen or placed under the authority of a receiver or trustee.

Qualified investor. The taxpayer must be a "qualified investor," in that he or she must be generally qualified to deduct theft losses under Code Sec. 165 and Reg. §1.165-8, did not have actual knowledge that the arrangement was fraudulent before it was publicly disclosed, and invested cash or other assets in the arrangement.

Investment through intermediary. A taxpayer is not considered to be a qualified investor if he or she did not invest directly in the specified fraudulent arrangement but, instead, invested through an intermediary investment fund or advisor. Thus, investors who unknowingly invest in a Ponzi scheme, such as the Madoff investment fund, through an intermediary fund or investment advisor are not covered by the safe harbor. However, the intermediary investment fund may itself qualify to claim the loss deduction under the safe harbor.

Amount of deduction. Up to 95% of qualified losses from a specified fraudulent arrangement, calculated through detailed definitions and formulas, may be deducted by a qualified investor as a theft loss. However, the amount of deductible losses cannot take into account any funds that were borrowed from the fraudulent arrangement or any of its principals or agents and invested in the arrangement, investment fees paid and deducted, amounts the fraudulent arrangement reported as income but that the qualified investor did not include in his gross income, funds that were not invested directly but, rather, were invested through an intermediary investment fund or advisor, any amount paid to the taxpayer for reimbursement or recovery, and other amounts paid or payable through insurance, the Securities Investor Protection Corporation (SIPC), and other similar potential claims or recovery payments.

Statement required. To take advantage of the safe harbor, the taxpayer must complete the statement provided as "Appendix A" to Rev. Proc. 2009-20 and file it with the tax return, amended return or claim for refund. The statement requires the taxpayer to provide specified information and computations. The taxpayer must also comply with all conditions set forth in the statement and in Rev. Proc. 2009-20, including that:

(1) The taxpayer will not deduct any amount of the theft loss in excess of the amount permitted by Rev. Proc. 2009-20.

(2) The taxpayer will not file returns or amended returns to exclude or recharacterize income from the fraudulent arrangement for previous tax years.

(3) The taxpayer will not later apply the alternative computation under Code Sec. 1341 regarding the theft loss deduction.

(4) The taxpayer will not apply the doctrine of equitable recoupment or mitigation provisions to income from the fraudulent arrangement reported in prior tax years, which would otherwise be subject to the time limits for filing refund claims under Code Sec. 6511.

Other tax treatment. Taxpayers electing not to use the safe harbor must satisfy the requirements of Code Sec. 165 in order to deduct investment fraud losses as theft losses. If the taxpayer can establish the amount of income reported and included in gross income for tax years for which the statute of limitations on refunds has expired, the IRS will not challenge the inclusion of that amount in basis for purposes of calculating the theft loss.

Shulman Comments
"The Madoff case is tragic," IRS Commissioner Douglas Shulman told reporters in a telephone press conference. "The victims are devastated." The case also "raises a staggering array of issues for the victims," Shulman noted. "We've worked hard to provide a straightforward approach" to these issues. The new guidance "assist[s] taxpayers who are victims of losses from Ponzi-type investment schemes; the guidance is not specific to the Madoff case," he indicated. The guidance allows taxpayers to deduct the principal amount of their investment and the earnings they have reported but left in the scheme (thus addressing phantom income), Shulman explained.

"The revenue ruling is important because determining the amount and timing of losses from these schemes is factually difficult and dependent on the prospect of recovering the lost money (which may not become known for several years)," Shulman said in his testimony to Congress. "The revenue procedure simplifies compliance for taxpayers (and administration for the IRS) by providing a [uniform approach for] determining the year in which the loss is deemed to occur and a simplified means of computing the amount of the loss," Shulman testified. It also avoids difficult problems of proving how much income reported from the scheme was fictitious, and how much was real, he stated.

Lawrence Hill, a partner with Dewey LeBoeuf in New York, told CCH that "the commissioner's guidance reduces a tremendous amount of the uncertainty and confusion surrounding the reporting of theft losses on taxpayers' 2008 returns. It will significantly reduce the cost of tax compliance for taxpayers and, in the long run, save enormous resources for the IRS."

Hill pointed out that "Perhaps most significantly, Rev. Rul. 2009-9 indicates, as Issue 5, that an individual is a "sole proprietorship," so that the individual, as long as he or she does not have gross revenues in 2008 of $15,000,000 or more, may elect the five-year carryback that was provided in the Stimulus Act for "small businesses", rather than only the three-year carryback that individuals would normally have. This could significantly mitigate the losses of many of the investors."

IRS officials elaborated on the guidance in comments to reporters:

- Investors suing Madoff are in the 95 percent category for claiming losses; investors suing third parties are in the 75 percent category.

- Taxpayers who recognized phantom income as capital gains would still be entitled to a deduction, regardless of the manner in which the initial income was reported.

- Taxpayers using the safe harbor in Rev. Proc. 2009-20 cannot go back to prior-year returns to remove phantom income. The entire loss must be claimed in the year of discovery.

- If a taxpayer has filed an amended return and was to use the safe harbor, he or she must refile for the year of the loss and file Appendix A to identify the amended returns.

- Investors that participated in a Ponzi scheme through a "feeder fund" cannot use the safe harbor directly. The fund can use the safe harbor to determine its total losses. If the fund is a partnership, it will report a share of the losses to each investor on Schedule K-1.

- Investors who do not use the safe harbor may claim a loss under the "standard rules," applied on a case-by-case basis. These rules are less clear than the safe harbor.

The officials would not comment when the year of discovery occurred (for claiming the loss) for Madoff investors or for any other scheme. They said it depends on the particular facts and that they had not examined these issues.

Rev. Rul. 71-381, 1971-2 CB 126, is obsoleted in part.
Rev. Proc. 2009-20

March 18, 2009

Code Sec. 165

Losses : Investment fraud : Ponzi scheme : Theft losses .



Part III Administrative, Procedural, and Miscellaneous

26 CFR 601.105 Examination of returns and claims for refund, credit or abatement; determination of correct tax liability.

(Also Part I, §§ 165 ; 1.165-8(c))

Rev. Proc. 2009-20



SECTION 1. PURPOSE

This revenue procedure provides an optional safe harbor treatment for taxpayers that experienced losses in certain investment arrangements discovered to be criminally fraudulent. This revenue procedure also describes how the Internal Revenue Service will treat a return that claims a deduction for such a loss and does not use the safe harbor treatment described in this revenue procedure.



SECTION 2. BACKGROUND

.01 The Service and Treasury Department are aware of investment arrangements that have been discovered to be fraudulent, resulting in significant losses to taxpayers. These arrangements often take the form of so-called "Ponzi" schemes, in which the party perpetrating the fraud receives cash or property from investors, purports to earn income for the investors, and reports to the investors income amounts that are wholly or partially fictitious. Payments, if any, of purported income or principal to investors are made from cash or property that other investors invested in the fraudulent arrangement. The party perpetrating the fraud criminally appropriates some or all of the investors' cash or property.

.02 Rev. Rul. 2009-9 , 2009 I.R.B (April 6, 2009), describes the proper income tax treatment for losses resulting from these Ponzi schemes.

.03 The Service and Treasury Department recognize that whether and when investors meet the requirements for claiming a theft loss for an investment in a Ponzi scheme are highly factual determinations that often cannot be made by taxpayers with certainty in the year the loss is discovered.

.04 In view of the number of investment arrangements recently discovered to be fraudulent and the extent of the potential losses, this revenue procedure provides an optional safe harbor under which qualified investors (as defined in § 4.03 of this revenue procedure) may treat a loss as a theft loss deduction when certain conditions are met. This treatment provides qualified investors with a uniform manner for determining their theft losses. In addition, this treatment avoids potentially difficult problems of proof in determining how much income reported in prior years was fictitious or a return of capital, and alleviates compliance and administrative burdens on both taxpayers and the Service.



SECTION 3. SCOPE

The safe harbor procedures of this revenue procedure apply to taxpayers that are qualified investors within the meaning of section 4.03 of this revenue procedure.



SECTION 4. DEFINITIONS

The following definitions apply solely for purposes of this revenue procedure.

.01 Specified fraudulent arrangement . A specified fraudulent arrangement is an arrangement in which a party (the lead figure) receives cash or property from investors; purports to earn income for the investors; reports income amounts to the investors that are partially or wholly fictitious; makes payments, if any, of purported income or principal to some investors from amounts that other investors invested in the fraudulent arrangement; and appropriates some or all of the investors' cash or property. For example, the fraudulent investment arrangement described in Rev. Rul. 2009-9 is a specified fraudulent arrangement.

.02 Qualified loss . A qualified loss is a loss resulting from a specified fraudulent arrangement in which, as a result of the conduct that caused the loss --

(1) The lead figure (or one of the lead figures, if more than one) was charged by indictment or information (not withdrawn or dismissed) under state or federal law with the commission of fraud, embezzlement or a similar crime that, if proven, would meet the definition of theft for purposes of § 165 of the Internal Revenue Code and § 1.165-8(d) of the Income Tax Regulations, under the law of the jurisdiction in which the theft occurred; or

(2) The lead figure was the subject of a state or federal criminal complaint (not withdrawn or dismissed) alleging the commission of a crime described in section 4.02(1) of this revenue procedure, and either -

(a) The complaint alleged an admission by the lead figure, or the execution of an affidavit by that person admitting the crime; or

(b) A receiver or trustee was appointed with respect to the arrangement or assets of the arrangement were frozen.

.03 Qualified investor . A qualified investor means a United States person, as defined in § 7701(a)(30) --

(1) That generally qualifies to deduct theft losses under § 165 and § 1.165-8 ;

(2) That did not have actual knowledge of the fraudulent nature of the investment arrangement prior to it becoming known to the general public;

(3) With respect to which the specified fraudulent arrangement is not a tax shelter, as defined in § 6662(d)(2)(C)(ii) ; and

(4) That transferred cash or property to a specified fraudulent arrangement. A qualified investor does not include a person that invested solely in a fund or other entity (separate from the investor for federal income tax purposes) that invested in the specified fraudulent arrangement. However, the fund or entity itself may be a qualified investor within the scope of this revenue procedure.

.04 Discovery year . A qualified investor's discovery year is the taxable year of the investor in which the indictment, information, or complaint described in section 4.02 of this revenue procedure is filed.

.05 Responsible group . Responsible group means, for any specified fraudulent arrangement, one or more of the following:

(1) The individual or individuals (including the lead figure) who conducted the specified fraudulent arrangement;

(2) Any investment vehicle or other entity that conducted the specified fraudulent arrangement, and employees, officers, or directors of that entity or entities;

(3) A liquidation, receivership, bankruptcy or similar estate established with respect to individuals or entities who conducted the specified fraudulent arrangement, in order to recover assets for the benefit of investors and creditors; or

(4) Parties that are subject to claims brought by a trustee, receiver, or other fiduciary on behalf of the liquidation, receivership, bankruptcy or similar estate described in section 4.05(3) of this revenue procedure.

.06 Qualified investment .

(1) Qualified investment means the excess, if any, of --

(a) The sum of --

(i) The total amount of cash, or the basis of property, that the qualified investor invested in the arrangement in all years; plus

(ii) The total amount of net income with respect to the specified fraudulent arrangement that, consistent with information received from the specified fraudulent arrangement, the qualified investor included in income for federal tax purposes for all taxable years prior to the discovery year, including taxable years for which a refund is barred by the statute of limitations; over

(b) The total amount of cash or property that the qualified investor withdrew in all years from the specified fraudulent arrangement (whether designated as income or principal).

(2) Qualified investment does not include any of the following --

(a) Amounts borrowed from the responsible group and invested in the specified fraudulent arrangement, to the extent the borrowed amounts were not repaid at the time the theft was discovered;

(b) Amounts such as fees that were paid to the responsible group and deducted for federal income tax purposes;

(c) Amounts reported to the qualified investor as taxable income that were not included in gross income on the investor's federal income tax returns; or

(d) Cash or property that the qualified investor invested in a fund or other entity (separate from the qualified investor for federal income tax purposes) that invested in a specified fraudulent arrangement.

.07 Actual recovery . Actual recovery means any amount a qualified investor actually receives in the discovery year from any source as reimbursement or recovery for the qualified loss.

.08 Potential insurance/SIPC recovery . Potential insurance/SIPC recovery means the sum of the amounts of all actual or potential claims for reimbursement for a qualified loss that, as of the last day of the discovery year, are attributable to --

(1) Insurance policies in the name of the qualified investor;

(2) Contractual arrangements other than insurance that guaranteed or otherwise protected against loss of the qualified investment; or

(3) Amounts payable from the Securities Investor Protection Corporation (SIPC), as advances for customer claims under 15 U.S.C. § 78f ff-3(a) (the Securities Investor Protection Act of 1970 ), or by a similar entity under a similar provision.

.09 Potential direct recovery . Potential direct recovery means the amount of all actual or potential claims for recovery for a qualified loss, as of the last day of the discovery year, against the responsible group.

.10 Potential third-party recovery . Potential third-party recovery means the amount of all actual or potential claims for recovery for a qualified loss, as of the last day of the discovery year, that are not described in section 4.08 or 4.09 of this revenue procedure.



SECTION 5. APPLICATION

.01 In general . If a qualified investor follows the procedures described in section 6 of this revenue procedure, the Service will not challenge the following treatment by the qualified investor of a qualified loss --

(1) The loss is deducted as a theft loss;

(2) The taxable year in which the theft was discovered within the meaning of § 165(e) is the discovery year described in section 4.04 of this revenue procedure; and

(3) The amount of the deduction is the amount specified in section 5.02 of this revenue procedure.

.02 Amount to be deducted . The amount specified in this section 5.02 is calculated as follows --

(1) Multiply the amount of the qualified investment by --

(a) 95 percent, for a qualified investor that does not pursue any potential third-party recovery; or

(b) 75 percent, for a qualified investor that is pursuing or intends to pursue any potential third-party recovery; and

(2) Subtract from this product the sum of any actual recovery and any potential insurance/SIPC recovery.

The amount of the deduction calculated under this section 5.02 is not further reduced by potential direct recovery or potential third-party recovery.

.03 Future recoveries . The qualified investor may have income or an additional deduction in a year subsequent to the discovery year depending on the actual amount of the loss that is eventually recovered. See § 1.165-1(d) ; Rev. Rul. 2009-9 .



SECTION 6. PROCEDURE

.01 A qualified investor that uses the safe harbor treatment described in section 5 of this revenue procedure must -

(1) Mark "Revenue Procedure 2009-20 " at the top of the Form 4684, Casualties and Thefts, for the federal income tax return for the discovery year. The taxpayer must enter the "deductible theft loss" amount from line 10 in Part II of Appendix A of this revenue procedure on line 34, section B, Part I, of the Form 4684 and should not complete the remainder of section B, Part I, of the Form 4684;

(2) Complete and sign the statement provided in Appendix A of this revenue procedure; and

(3) Attach the executed statement provided in Appendix A of this revenue procedure to the qualified investor's timely filed (including extensions) federal income tax return for the discovery year. Notwithstanding the preceding sentence, if, before April 17, 2009, the taxpayer has filed a return for the discovery year or an amended return for a prior year that is inconsistent with the safe harbor treatment provided by this revenue procedure, the taxpayer must indicate this fact on the executed statement and must attach the statement to the return (or amended return) for the discovery year that is consistent with the safe harbor treatment provided by this revenue procedure and that is filed on or before May 15, 2009.

.02 By executing the statement provided in Appendix A of this revenue procedure, the taxpayer agrees --

(1) Not to deduct in the discovery year any amount of the theft loss in excess of the deduction permitted by section 5 of this revenue procedure;

(2) Not to file returns or amended returns to exclude or recharacterize income reported with respect to the investment arrangement in taxable years preceding the discovery year;

(3) Not to apply the alternative computation in § 1341 with respect to the theft loss deduction allowed by this revenue procedure; and

(4) Not to apply the doctrine of equitable recoupment or the mitigation provisions in §§ 1311 -1314 with respect to income from the investment arrangement that was reported in taxable years that are otherwise barred by the period of limitations on filing a claim for refund under § 6511 .



SECTION 7. EFFECTIVE DATE

This revenue procedure applies to losses for which the discovery year is a taxable year beginning after December 31, 2007.



SECTION 8. TAXPAYERS THAT DO NOT USE THE SAFE HARBOR TREATMENT PROVIDED BY THIS REVENUE PROCEDURE

.01 A taxpayer that chooses not to apply the safe harbor treatment provided by this revenue procedure to a claimed theft loss is subject to all of the generally applicable provisions governing the deductibility of losses under § 165 . For example, a taxpayer seeking a theft loss deduction must establish that the loss was from theft and that the theft was discovered in the year the taxpayer claims the deduction. The taxpayer must also establish, through sufficient documentation, the amount of the claimed loss and must establish that no claim for reimbursement of any portion of the loss exists with respect to which there is a reasonable prospect of recovery in the taxable year in which the taxpayer claims the loss.

.02 A taxpayer that chooses not to apply the safe harbor treatment of this revenue procedure to a claimed theft loss and that files or amends federal income tax returns for years prior to the discovery year to exclude amounts reported as income to the taxpayer from the investment arrangement must establish that the amounts sought to be excluded in fact were not income that was actually or constructively received by the taxpayer (or accrued by the taxpayer, in the case of a taxpayer using an accrual method of accounting). However, provided a taxpayer can establish the amount of net income from the investment arrangement that was reported and included in the taxpayer's gross income consistent with information received from the specified fraudulent arrangement in taxable years for which the period of limitation on filing a claim for refund under § 6511 has expired, the Service will not challenge the taxpayer's inclusion of that amount in basis for determining the amount of any allowable theft loss, whether or not the income was genuine.

.03 Returns claiming theft loss deductions from fraudulent investment arrangements are subject to examination by the Service.



SECTION 9. PAPERWORK REDUCTION ACT

The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-0074. Please refer to the Paperwork Reduction Act statement accompanying Form 1040, U.S. Individual Income Tax Return, for further information.



DRAFTING INFORMATION

The principal author of this revenue procedure is Norma Rotunno of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Ms. Rotunno at (202) 622-7900.



APPENDIX A


Statement by Taxpayer Using the Procedures in Rev. Proc. 2009-20 to Determine a Theft Loss Deduction Related to a Fraudulent Investment Arrangement




Part 1. Identification

1. Name of Taxpayer ...

2. Taxpayer Identification Number ...



Part II. Computation of deduction

(See Rev. Proc. 2009-20 for the definitions of the terms used in this worksheet.)


____________________________________________________________________________________
Line Computation of Deductible Theft Loss Pursuant to Rev. Proc. 2009-20

____________________________________________________________________________________
1 Initial investment

____________________________________________________________________________________
2 Plus: Subsequent investments

____________________________________________________________________________________
3 Plus: Income reported in prior years

____________________________________________________________________________________
4 Less: Withdrawals ( )

____________________________________________________________________________________
5 Total qualified investment (combine lines 1 through 4)

____________________________________________________________________________________
6 Percentage of qualified investment (95% of line 5 for
investors with no potential third-party recovery; 75% of
line 5 for investors with potential third-party recovery)

____________________________________________________________________________________
7 Actual recovery

____________________________________________________________________________________
8 Potential insurance/SIPC recovery

____________________________________________________________________________________
9 Total recoveries (add lines 7 and 8) ( )

____________________________________________________________________________________
10 Deductible theft loss (line 6 minus line 9)

____________________________________________________________________________________




Part III. Required statements and declarations

1. I am claiming a theft loss deduction pursuant to Rev. Proc. 2009-20 from a specified fraudulent arrangement conducted by the following individual or entity (provide the name, address, and taxpayer identification number (if known)).
________________________________________


2 I have written documentation to support the amounts reported in Part II of this document.

3. I am a qualified investor as defined in § 4.03 of Rev. Proc. 2009-20 .

4. If I have determined the amount of my theft loss deduction under § 5.02(1)(a) of Rev. Proc. 2009-20 , I declare that I have not pursued and do not intend to pursue any potential third-party recovery, as that term is defined in § 4.10 of Rev. Proc. 2009-20 .

5. If I have already filed a return or amended return that does not satisfy the conditions in § 6.02 of Rev. Proc 2009-20 , I agree to all adjustments or actions that are necessary to comply with those conditions. The tax year or years for which I filed the return(s) or amended return(s) and the date(s) on which they were filed are as follows: ... ... ... ...



Part IV. Signature

I make the following agreements and declarations:

1. I agree to comply with the conditions and agreements set forth in Rev. Proc. 2009-20 and this document.

2. Under penalties of perjury, I declare that the information provided in Parts I-III of this document is, to the best of my knowledge and belief, true, correct and complete.

Your signature here ... Date signed: ...

Your spouse's signature here ... Date signed: ...

Corporate Name ...

Corporate Officer's signature ...

Title ...

Date signed ...

Entity Name ...

S-corporation, Partnership, Limited Liability Company, Trust

Entity Officer's signature ...

Date signed ...

Signature of executor ...

Date signed ...