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Essay / Research Paper Abstract
4 pages in length. When monies are lost through theft or fraud and are not recompensed, at year-end the loss incurred can more than likely be deducted as a theft loss as reported on the federal income tax return. If investments result in a loss in which the partner of that investment was defrauded, the report of the full amount on the income tax statement can normally be reported as loss. This paper explains recourse action when faced with investment fraud as regards income tax treatment using a hypothetical case of investment fraud. The paper incorporates information from Robert S. Gertsell, 46 T.C. 161 (1966) and Michele Monteleone, 34 T.C. 688 (1960).
Page Count:
4 pages (~225 words per page)
File: D0_JGAtc161.rtf
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Unformatted sample text from the term paper:
venture that purchases poorly managed restaurants, making them once again profitable and re-selling them for a profit. As the evening progressed, Dan proceeded to tell Kay of a current
project he was working on-a restaurant that would turn out to be a "gold-mine" in his words, but he did not have the financial backing to actually close the deal.
Based on what she had learned that evening, Kay offered to loan Dan thirty thousand dollars for the venture. An agreement was written up whereby Dan agreed to
pay Kay the entire amount over a five-year period at fourteen- percent interest. Several months later Kay made the startling discovery that Dan had never purchased the intended restaurant and
had used her money for his own benefit. She sued Dan in court alleging that he had fraudulently and deceitfully represented what the money would be used for, ultimately
defrauding her for her money. Unfortunately, Kay was never able to recover any of the money she had loaned to Dan. The question now is whether Kay can
claim this loss on her income tax return. It is clearly shown here that Dan intentionally defrauded Kay of the thirty thousand dollars, having never purchased the restaurant for which
the money was intended and in fact never intending to do so in the first place. Because they had a written agreement as to the terms of repayment for
the full amount, this constitutes breach of contract on Dans part. This is hardly a unique case. Every day we see people defrauded of their money, with no
recourse but to file a lawsuit. This does not always see justice done, but it needs to take place in order to prove that there was indeed an act
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