COMPUTER FRAUD

[Crawford, Dave]

Hi All,

Here's one I've heard about, but never been asked before. My dad is 90 years old, suffering cognitive decline, and I am now helping him manage his affairs, including helping him do his taxes. He lives in California. In early 2022 he was the victim of fraud, with someone taking control of his computer, selling his stocks on E*Trade ($140,000), and then accessing his bank account and wiring the funds out of his bank to Thailand (the $140k from E_Trade and another $47k from his bank). We submitted an online fraud report to the FBI and never heard anything back from them. We also filed a claim with E*Trade, who has a “Complete Protection Guarantee” against unauthorized use, but they denied his claim. So now it is tax season and his 1099 from E*Trade is showing a large amount of capital gains, which will push him into an even higher tax bracket. He never realized the proceeds of the stocks stolen from him at E*Trade, and now he is faced with a huge tax bill on those proceeds (and we are worried if he will have enough money to see him through to the end of his life). So is there ANYTHING at all we can do in this situation to limit his tax liability in the case of this fraud?

I sure would appreciate any advice you would be able to give.

 

Thanks,

Dave

[Diana Skocypec]

This is identity theft; I would use the procedures on the IRS website to start the process.

I've only had this occur with W2 income and took more than a few months to handle.

I would definitely request a PIN for your dad.

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Diana L. Skocypec

A Tax Lady for All Seasons

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[Lee Reams]

I think you were asking how to mitigate the gains from stolen investment property…This is from the BB:

LOSSES FROM INVESTMENT PROPERTY  

Income-producing property, also referred to as investment property, is property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art. Losses from casualties to and theft of income-producing property are reported in Section B on page 2 of Form 4684, then deducted as a miscellaneous itemized deduction on Schedule A, line 16 (not subject to the 2% of AGI limitation). These losses are not subject to the $100-per-event or 10%-of-AGI limits.

That should help reduce the taxable income.

Lee

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[Crawford, Dave]

Thanks, Lee and Diana.  I really appreciate your input.

Grace, health and peace,

Dave

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