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Exchange Traded Funds report

 
 AIG
Date 3/19/2010
Time 4:03pm ET
Trade 34.80
Change 0.16
% Chg 0.46%
Open 34.92
High 35.02
Low 33.85
Volume 11,326,783
Intraday 
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FA News
November 09, 2009
Madoff Victims May Get Tax Relief
(Dow Jones) Hedge fund and other investors left out of Madoff tax refund rules last year may get their chance to recover taxes paid on phantom profits, after all.

A measure included in a wider bill to extend jobless benefits would help people who invested in Bernard Madoff through so-called feeder funds, including hedge funds. Direct Madoff investors got tax help last year, but the rules did nothing for fund investors.

Sen. Charles Schumer, D.-N.Y., this week touted the bill as help for the little guy, smaller investors who lost money in the Ponzi scheme. Tax experts agreed, but noted the wider bill is really aimed at helping businesses larger than $15 million carry back losses over five years for tax purposes.

And they said that not just small investors would be helped. Rather, the bill would also "benefit both large hedge fund investors and certain smaller investors" who invested through feeder funds, said David Shechtman, chairman of the business tax group at law firm Drinker Biddle & Reath LLP.

Richard M. Leder, a tax partner at Chadbourne & Parke LLP in New York, said the bill will indeed be "very, very important" for many people.

For Stephen M. Breitstone, partner and head of the tax practice group at Meltzer, Lippe, Goldstein & Breitstone LLP in Mineola, N.Y., the legislation comes after prospects for something like it dimmed amid the health-care debate. He said he's "pleasantly surprised that someone is still looking to provide relief to the community of Madoff victims."

The new legislation would close a gap left after the Internal Revenue Service set the stage in April for large refunds to direct investors. The agency did that through a generous reading of rules that let investors take a theft loss on their 2008 tax returns to recover taxes paid on money they don't ever expect to see. It was less openhanded to those suing third parties, because these investors have a better prospect of recovering money.

Taxpayers seeking a Madoff refund under the IRS safe harbor had to claim the theft loss on their 2008 returns, and just passed the October 15 deadline to file for an extension. Some people, however, will be able to file later under a complicated set of rules.

This summer, the IRS began to send refund checks to Madoff investors. Some were for substantial amounts, nearly half a million dollars in some cases. The very big refunds could be for tens of millions of dollars.

 

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