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Microcap & Penny Stocks : GIFS -- Ignore unavailable to you. Want to Upgrade?

To: Stephen Stacks who wrote (7239)	2/21/1998 2:16:00 PM
From: Marc T. McCurry	Respond to of 8012

Tax Treatment - Part II A response to some of the e-mails I have received or other items of interest: 1. the loss is limited to a net 3,000 loss; any carryover applies to the next taxable year. For example, I lost 12K on gifs, made 5K elsewhere on schedule D. My loss is 7K; 3,000 deductible in 1997, the rest carries forward until fully utilized. 2. GJC will have to report the loss in 1997. It is quite evident the shares became worthless in 1997. Any carryover, however, will be deductible in 1998, subject to above noted limitations. 3. The fraud position: I do not feel that this can be deducted all in one year as a casualty loss. When this thing went belly up, I researched the position thoroughly and talked with several former co-workers at a Big Six firm and our conclusion was unanimous: there might be a position, but it is very aggressive and the IRS probably would disallow it upon audit. Basically, this loss is a capital loss. Several others who also researched it and/or discussed the issue with their accountants came to the same conclusion. I personally am not taking the position on my tax return and I do two returns who also have GIFS losses and I am not taking the position on their returns. However, this does not mean it should not be pursued, but be advised it's not a clean-cut issue and is in fact rather aggressive. I hope this helps; have a good weekend. regards, mtm