Here's one site that spells it out:
http://www.aicpa.org/pubs/jofa/apr2005/siegel.htm
Here's a summary:
THEFT LOSS VS. CAPITAL LOSS
Section 165(c)(2) theft loss deductions can be more advantageous than capital loss ones for the following reasons:
As ordinary deductions, they’re not subject to limitations imposed by IRC section 1211.
They’re not miscellaneous itemized deductions subject to the 2% floor imposed under section 67(a).
They’re excluded from the phaseout of itemized deductions required by section 68(b).
Theft losses that exceed a taxpayer’s gross income give rise to net operating losses that can be carried back three years or forward for 20 years.
They can be used to reduce a taxpayer’s tax liability to zero without resulting in any liability for alternative minimum tax (AMT).
Thanks for tht info California. I was not aware of that. That should be very usefull to the investors here. I did see a paragraph that answered one of your questions:
If, in the year of discovery, there exists a claim for reimbursement with a reasonable prospect of recovery, that portion of the loss is not deductible under section 165(c)(2). The regulations further provide that “whether a reasonable prospect of recovery exists with respect to a claim for reimbursement of a loss is a question of fact to be determined upon an examination of all facts and circumstances.” Therefore, the taxpayer must wait for the year in which it can be ascertained with reasonable certainty whether such reimbursement will be received.
So it looks like you can wait until there is no chance of recovery. Or, you could estimate the amount and make apropriate adjustments at the time of recovery. In any event, that is excellent information you have provided for the people here.
Dear Mr. Hays, If it wouldn't be to much to ask, we all would like an update on any new developments. Time frame, properties selling etc.
Lets start the New Year with good news from you. Thanks, TM
Dear Investor in Pinnacle Development Partners:
While a substantial amount of work remains to be done, we are now in a position to provide you with additional information that might be useful to you as you deal with income tax issues related to your Pinnacle investment. On November 16, 2006, we provided a “Tax Memorandum for Investors” and posted on the Receiver’s web site. While the purpose of this letter and the prior memorandum is to provide you with factual information that might be relevant to your tax situation, it is not tax advice. You should consult with a qualified tax adviser regarding your specific circumstance.
First, and quite importantly, we have determined that the 2005 K-1’s and Form 1099’s issued by Pinnacle are not correct. Therefore, if you received a 2005 K-1 or Form 1099 you should disregard it. Our understanding is that the Internal Revenue Service was not provided with copies of any K-1. For certain investors, amended Form 1099’s for 2005 will be issued.
Second, there will be a distribution to investors and other creditors. We are currently unable to determine how much will ultimately be distributed, but we can provide you with the following information:
1. Our current plan is to make an interim distribution using a significant portion of the cash on hand and then a final distribution when the real property assets have been liquidated. We have 21 real estate parcels and it may take some time to sell all the properties. Accordingly, after the initial distribution, we may make additional interim distributions when significant funds are available.
2. Before any distribution can be made, we must review all claims and determine the amount owed to each investor. In this regard, we expect to calculate each investor’s loss (or gain) on a “cash in – cash out” basis. For example, if you invested $10,000 in cash and received no payment from Pinnacle, your loss would be $10,000. The amount of the loss will not be affected by any returns” or re-investment of principal. By way of comparison, if you invested $10,000 and received a $2,500 interest check from Pinnacle, your loss would be $7,500.
3. Subject to court approval, we expect to treat all investors as creditors of Pinnacle and not creditors of the partnership named in the agreement. For a variety of reasons, the status of the specific partnership entities should have no impact on how distributions are made or to whom they are made. We will be filing a detailed plan with the court to obtain court approval and the when filed the document will be posted on the Receiver’s web site.
4. No interim distribution can be made until the claims have been reviewed and a distribution plan has been approved by the court. This is a high priority, but will, at a minimum, take several months to complete. Please note several hundred investors have not filed claims and we have asked the court to allow these investors to continue filing claims during our claims review process. We do not anticipate this will slow down the claims administration and distribution process.
It is important that you understand that unless the total amounts you actually received from Pinnacle exceed the amount of cash actually invested by you, we will treat any and all payments made by Pinnacle (including referral fees) as a return of principal. If, however, you actually received more than you invested (calculated on a “cash in – cash out” basis as described above), the excess amount will be treated as income to you and a 1099 will be issued for 2005 and/or 2006 as appropriate. In this regard, you should understand that under the circumstances of this case, equity requires that any excess amounts be returned to the Receiver Estate. When our claims analysis is complete, we expect to request that all “winners” return any excess funds over amount invested. If you are in this category and your tax adviser deems it prudent to do so, you may return the excess amounts now.
Next week we plan to file the Receiver’s Second Interim Report which had detailed information on the real estate. In the coming weeks and months, we will be filing additional reports and important administrative motions with the court. We will continue to post this information on the Pinnacle page of our website – www.haysconsulting.net. I encourage you to continue to look to that site as your primary information source.
Thank you for your patience and cooperation.
Sincerely,
/s
S. Gregory Hays, Receiver
Thank you so much for all your help Mr. Hays.
God Bless You!!!!
Sammy
The problem is that Pinnacle was a scam, and the people that ran it spent the money (or a lot of it, anyway). They may have $5 million (or more) in assets, but they owe something like $30 million to investors. The government came in, took over everything and is trying to get investors as much of their money back as possible. Mr. Hays was appointed by the court to do this -- he had nothing to do with Pinnacle when it was operational. He's on your side, trying to find as much of the money as possible so he can distribute it to the investors who were wronged. Mr. Hays is quite professional, the people that operated Pinnacle, of course, are not.
Be sure to read the stuff on his website:
http://www.haysconsulting.net/pinnacle.html
Since the Pinnacle scam...I found a legit opportunity to invest with a wonderful company. Returns have been at 60%APR...(5%) monthly....if you would like to know more about this please let me know!!
Taxrunner, could you please PM me more info on this company? Thanks.
I also wanted to voice my opinion on the extension given to the people who did not send in their claim forms by the Dec. 31 deadline. It seems like the last several months that this message board has been up the majority of people ask how much money will we get and when?? We all want as much as possible to recoup our losses. So why didn't everyone rushed to the post office before the deadline to get their claim forms to Mr. Hays? There may be some legitimate reasons for a few people, but this delay will cost the rest of us more $$ again. Mr. Hays has to send out more cards and/or more claim forms to the "several hundred" people who missed the deadline. They obviously had to take some time and effort to figure out who these people were....tick tock...tick tock. The more time spent chasing irresponsible people the less money the rest of us get. Time is money!! I think the 2 months everyone had to send in their claim forms was plenty of time. Who knows if the March 1 extension will be the last one?
The Receiver's Second Interim Report was filed today with the United States District Court for the Northern District of Georgia. The report should be available on my web site this weekend. This report and the appendix focus on the real estate Pinnacle purchased.
Please note that we do not belive exending the deadline to file claims will dealy the distribution process. We are currently reviewing claims and giving all investors an opportunity to file claims. The court has set a bar date which means that if claims are not filed by that March 1st they will be disallowed.
kilfoyle, chemar22,
Does a bomb have to off in your heads before you understand that anything promising 60% reutrns in a year is either a scam or total BS?? If such returns were consistantly possible there would be nobody working as we all could retire. I mean I am not trying to be rude but it is amazing that someone would post some info on anothetr similar type investment that promises unrealistic returns and you are asking to get ingormation on it?????? You need to get a piggy bank and put your money in it and then hide it under your bed before you blow it all.
Before you should sound off....there are developers that need investors for great returns on a short time period. Just because one experience blew up in our face you can't stop looking. Why don't you ask six of the previous pinnacle people that did get involved with this legit company! They all have gotten principle and interest back with Class D shares at a whopping 12% for a two month period. With that Class closed, their is opportunity with Class B shares now. And this class will be closed shortly also....and it will be over for this development(132 acres w/ 532 SF homes) in the best area in DFW!!! But your probly just a glass half empty guy anyway......
JustinD,
Just because Pinnacle was a scam doesn't mean all opportunities are! I have personally been a part of a real estate opportunity for the last 5 years thats paying me 50% annually! The only reason I got involved with Pinnacle was because I already knew there were real, legitimate companies doing just that. Sometimes you have to broaden your horizons!
I don't consider myself ignorant or someone who believes in BS!! I went to Atlanta to check out Pinnacle, met with all their players and believed them to be the real deal. Yes, they fooled me and 1999 other people. I'm not a woman that curls up in a ball and feels sorry for myself for the rest of my life. Get a grip, move on, and find something else that works.
chemar22, JustinD, txrunner: I think each one of you are correct in regards to your opinion. However, this particular forum is read by so many people that had no business investing with Pinnacle and did so only because they saw it in a mainstream publication. There was no understanding by them regarding the risk/reward process of investment. Plenty of people put way too much of their funds into this investment. (And that would have been true even if Pinnacle was on the level). In agreement with JustinD: Because of this, higher risk investments (as touted by txrunner) are probably not suited for this forum due mainly because of reader’s lack of sophistication and/or their non-accredited status.
But for people that can afford to take the risk, chemar22 is correct: these types of successful higher risk/reward investments are abundant throughout the country and we also have participated in them after our due diligence efforts have met. (And as we point out on our website, for our investment offerings: these types of investments have no guarantee, have no federal insurance, may lose value and past performance can not predict the future.
But after reading this forum over the last half year, it is apparent that most investors in Pinnacle were not prepared for the loss of principal. Too many people had all their eggs in this basket. I can only imagine the devastation that it was caused in their family.
In closing, never invest just because other people are doing it; that rarely pays off. Invest only what you are comfortable in doing. Don't try to make up your Pinnacle loss by trying to double your money on something else that seems quick and easy. You could lose that too.
Exactly my point. Oh well, good luck to them.
Taxrunner, could you please PM me more info on this company? Thanks AMR
Please note that we do not belive exending the deadline to file claims will dealy the distribution process. We are currently reviewing claims and giving all investors an opportunity to file claims. The court has set a bar date which means that if claims are not filed by that March 1st they will be disallowed.
Receiver,
On January 26 you stated that second report would be posted on your Website over the weekend. It's still not there. Any ETA on when second report will be available on your Website?
Thank you.
On on January 26 you stated that second report would be posted on your Website over the weekend. It's still not there. Any ETA on when second report will be available on your Website?
Thank you.
It's there. See:
and
Appendix to 2nd Interim Report
Both are listed at: http://haysconsulting.net/pinnacle.html under "Court Docket Activity"
TN, Thank you. I had a link in favorites and for some reason it would not refresh data on the Hay's Website.