A Government Bailout for Madoff Investors? « The Washington Independent
Could there be another government bailout brewing, this one aimed at all the rich people who invested with disgraced financier Bernard Madoff, without ever bothering with due diligence? Bloomberg raises that possibility today by noting that people who lost their millions with Madoff may get some of it back through federal tax returns.
“The Madoff debacle will result in what amounts to another federal government bailout,” said Warren Kessler, an attorney at the Los Angeles law firm Kessler & Kessler. “It is likely that the Treasury will wind up refunding taxes,” at least on the loss of money individuals invested with Madoff, he said.
Capital-gains taxes paid by investors may be refundable for 2005 through 2007, lawyers said. In addition, they said investors probably can convince the Internal Revenue Service they are victims of theft, which would let them deduct losses from their income taxes dating back to 2006. Any unused theft losses could be used to reduce tax liabilities for the next 20 years.
This should go over really well, especially after autoworkers were told they earn too much money and to go take a hike.