Did anyone else receive the REL Liquidating Trust/Tax Info letter?

Aside from how much the mailing cost us, what does it mean?  Anyone?  Do we have any tax professionals who can comment?

REL Liquidating Trust tax info notice December 2012

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14 thoughts on “Did anyone else receive the REL Liquidating Trust/Tax Info letter?

  1. We received it; suprised that this is the first comment on it. It will me different things to different folks, based on their tax situation, but my understanding is that this development affects capital gains only; if and when the lawsuits get resolved, we could receive a credit against all income, not just capital gains. But I am not an expert.

  2. I would also appreciate an explanation of what the RE Loan letter means. I understand that it’s not advice and with no responsibility, from whoever responds.

  3. Actually I think there are tax benefits right away. As I have been researching the Grantor letter, noteholders are treated as an owner of the trust. As such, if you choose to acknowledge the capital loss in 2012, you can take it. I plan to use the note value used in the Bankruptcy proceedings versus the beneficial interest value indicated in the Grantor Letter to take my 2012 capital loss and to carry forward the loss (schedule d Line 10).

    The Grantor Letter shows a section 1231 gain(loss) which I am reporting on ”
    Schedule E line 33(A)(c) and other trust income reporting on ”
    Schedule E line 33(A)(d).This “loss” then transfers to Form 1040 Line 17. In most cases everyone will see an immediate tax benefit from this loss.

    The Grantor Letter shows “Deductionsnot subject to a 2 Percent Limitation”.. This is a little tricky but I believe these deductions can all be claimed on Schedule A line 28. This is also a very good deduction for noteholders

    I would appreciate feedback from other investors. I am not an accountant or a tax professional but hope i am on the right track.

    Bottom line to noteholders is don’t just file this Grantor Letter away.

    anyone has received comments from their CPA’s or Tax folks on how the Grantor Letter is treated please share.

    • This is solely my finding and does not constitute advice or an application to varying individual circumstances. Sched E (part III), Form 4797 and 8582. The loss benefit will be dependent on everyone’s individual situation since they’re capped beyond which they’re unallowed for the current year and will need to be carried forward. Considering the cap on capital losses, unless one has gains, it can take more than a lifetime to write-off the loss balance since most trustees have a fair amount invested.

      Under the IRC165, the full amount can be written off against ordinary income (not only capital gains). However, my own understanding, which may be different from what the code implies, is that the defendants (our Ng + Horwitz friends) must be charged in a criminal complaint by the Feds or State.

      Write to the US Attorney’s office (since the FBI is investigating, the district attorney will probably not get involved) demanding that criminal charges be filed. Even better, if the Ngs + other defendants come out and take ownership of their actions by admitting fraud/theft.

      This may be the best case of recovery as the current valuation of 6.7% by the Trustee will keep dwindling until nothing is left once the hovering vultures get ready to leave.

    • “Ron” are you still out there? We found your tax analysis insightful last year. We are wondering what you are doing this year and if you have any new insights with respect to the Grantor letter? Do you feel the same way about the approach as last year?
      Many thanks…

      • Continuing to capture some of the additional tax benefits from the Grantors letter for 2103. Waiting for Sen. feinsteins office to pressure SEC to release documents. Hoping there will be enough to show fraud and open the door for ordinary income deductions.

        • I received a response from Diane Feinstein today. Nothing too enlightening except that she said that the SEC is trying to add Barney Ng to their investigation. She acknowledged that the DOJ “Didn’t complete it’s investigation” before the statute of limitations expired. I wrote back asking her report to us the reason the DOJ allowed the statute of limitations to run out and if there would be any repercussions. The email was not a form letter, I was pleased to note. Anyone else receive a response lately?

          • Thank you for sharing what seems to be a promising step forward.
            Does anyone know if there are any assets remaining such that we might receive something back in cold hard cash?

          • To Adrea
            I received the same letter today. So far, I do not feel enormously encouraged. However, my fingers are definitely crossed!

          • Hi,
            Thanks for responding. Do you mean there are no assets left to be sold, so not encouraged about future potential return of investment?

            Are there any other lawsuits pending that might bring some of our principal back?

          • I’m sorry to say there are many for which the deductions have almost no value. Huge sums lost need to be offset by huge incomes, don’t they?
            And if the income was primarily from the investments, then what good are the losses?

            Once again, does anyone know if there are any assets left to be sold and any investment potentially recovered….or is this letter answering that and I’m just not hearing it?

  4. My Tax person is missing a copy of this letter for one of our accounts and can’t finish our filing.
    Dennis Faulkner who prepared the K1’s does not seem to list any contact info. other than a Dallas address. Does anyone have a phone/email for him?

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