Ezel / IRS Rulings / 200919036

CCA 200919036: Ponzi-scheme theft loss treatment applied retroactively

Number
200919036
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Limitations on Losses of Individuals - Transaction Entered Into For Profit
Topics
Income and deductions
Code sections
§ 165
Ruling dated
March 25, 2009
Publicly released
May 8, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel addressed the treatment of an investment theft loss from a Ponzi scheme under Revenue Ruling 2009-9. The ruling's conclusion that the loss was not subject to limitations applied retroactively to at least 1984, when the law was clarified. A taxpayer whose loss was discovered before the effective date of the related revenue procedure could not use that procedure's safe harbor. The taxpayer could still claim a theft loss deduction by satisfying the normal rules described in the revenue ruling.

Ruling snapshot

  • Question: Could a taxpayer apply the Ponzi-scheme theft loss guidance to an earlier loss and use the related safe harbor?
  • Outcome: Advice given: the revenue ruling applied retroactively to at least 1984, but the safe harbor was unavailable if the loss was discovered before its effective date.
  • Key authorities: IRC § 165; Rev. Rul. 2009-9.

Full text (IRS public release)

ID: CCA_2009032512394450 Number: 200919036
Release Date: 5/8/2009
Office: ----------
UILC: 165.03-00

From: --------------------
Sent: Wednesday, March 25, 2009 12:39:48 PM
To: -------------------
Cc:
Subject: FW: Rev. Rul. 2009-9 regarding treatment of theft loss from ponzi scheme

The holding in the Revenue Ruling that an investment theft loss is not subject to limitations is retroactive to at least 1984, when the law was clarified, as discussed in the ruling. The taxpayer cannot use the Revenue Procedure safe harbor if the loss was discovered prior to its effective date, but can take a theft loss deduction if the taxpayer qualifies under the normal rules, as set out in the Revenue Ruling.

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