Newlead Holdings Ltd. (fka NEWLF)

[badshah]

Need some assistance from the old timers here...

Can losses incurred in NEWL/NEWLF be used as a casualty or theft loss deductible using Form 4684 ? Does anyone know if this has been done by any investor in NEWL ?

If you have any memory that this subject has been addressed on this board, can you please point me to the relevant posts ? Thanks.

See below a reference I have successfully used to claim such a loss for two stocks in the recent past...USXP and LLEL

http://www.floridabar.org/DIVCOM/JN/JNJournal01.nsf/c0d731e03de9828d852574580042ae7a/5c1b563d60425a978525769b00672304!OpenDocument&Highlight=0,*

The Florida Bar Journal (January, 2010 Volume 84, No. 1)
Can an Investment Become a Theft for Tax Purposes?
by Jeffrey P. Coleman and Jennifer Newsom

In this article, it states under “The Use of the IRS’s Safe Harbor for “Theft Loss” Treatment for Losses Resulting from Ponzi Schemes”

“On March 17, 2009, the IRS issued Revenue Procedure 2009-20,29 creating an optional “safe harbor” for treatment of certain investment losses as “theft losses” (think Madoff). Under this procedure, if the taxpayer elects the safe harbor, a “theft loss” is deemed to occur. The deemed theft loss, called a “qualified loss,” occurs when a taxpayer has invested in a “specified fraudulent arrangement” and one or more of the perpetrators has been criminally charged with one or more crimes that would meet the definition of “theft” for purposes of I.R.C. §165, provided certain other conditions are satisfied. This safe harbor treatment is available to losses for which the “discovery year,” as specifically defined in the procedure, is 2008 or later.

Also, under “Establishing the Loss as a “Qualified Loss”

First, to utilize the safe harbor, the taxpayer must have invested in a “specified fraudulent arrangement.” A specified fraudulent arrangement is, generally speaking, a Ponzi scheme.30

Second, to utilize the safe harbor, one or more of the perpetrators must have been charged, criminally, by indictment, information, or complaint (not withdrawn or dismissed) under state or federal law. The criminal charges, as previously mentioned, must constitute “theft” under the law of the jurisdiction in which the theft occurred, consistent with the existing case law governing this issue.31 Third, if the charges are by complaint (versus indictment or information), then one of the following three factors must also be present: 1) the complaint must allege an “admission by the lead figure,” or 2) a receiver or trustee must have been appointed for the specified fraudulent arrangement, or 3) the assets of the specified fraudulent arrangement must have been frozen.32