Church Bond loss
I know bonds are complicated and church bonds while distributions are often housed in a traditional IRA are not really a similar product. Since the church bond is secured with the property in a borrow lenders type transaction, can a loss be deducted under capital gains loss or misc loss? I found out in September 2021, that the Trustee walked away from the bond in 7/2016 and the Principal of the church academy went to jail for 65 years. So there is no one to seek restitution or damage from for even the initial investment, much less the “payouts” that were supposed to be delivered and noted as delivered by the custodian for many years. The bond custodian Gold Star chose not to pursue against the property or Trustee and rated the FMV to zero and removed all previous payouts in the account. In my case $16K. Since this appears to be somewhat theft and for sure a criminal conviction that led to the zero valuation can it be deducted on 2021 taxes anywhere? It has wiped me out this year for income. It was to mature 7/2022. Thank you
Terry Says
What a horrible story. I hope others will read and be wary.
1. If this investment was inside an IRA, you get no tax deduction. Period.
2. If this investment was NOT inside a retirement account, you still have a problem. The 2017 tax reforms eliminated the possibility of deducting casualty or theft losses, except for Federal Disaster areas. Read this article.
I’m afraid this was a very expensive lesson, with no tax benefit.
