SECTION 5. EFFECT ON OTHER

DOCUMENTS

Rev. Proc. 2009–20 is modified.

DRAFTING INFORMATION

The principal author of this revenue procedure is Justin G. Meeks of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Meeks at (202) 622–5020 (not a toll-free call).

qualified losses from certain fraudulent investment schemes. Under section 4.02 of Rev. Proc. 2009–20, a qualified loss is a loss from a specified fraudulent arrangement (defined in section 4.01) for which authorities have charged the lead figure by indictment, information, or criminal complaint with a crime that meets the definition of theft for purposes of § 165.

.03 Since publication of Rev. Proc. 2009–20, the deaths of some lead figures in Ponzi schemes have foreclosed authorities’ ability to charge them with criminal theft. Qualified investors in these cases are unable to meet the definition of a qualified loss in section 4.02 of Rev. Proc. 2009–20 and therefore are precluded from using the optional safe harbor, solely because of the death of a lead figure. This revenue procedure expands the definition of qualified loss in Rev. Proc. 2009–20 to address these cases.

.04 This revenue procedure also clarifies that the terms “indictment,” “information,” and “criminal complaint” in section 4.02 of Rev. Proc. 2009–20 have meanings similar to the use of those terms in the Federal Rules of Criminal Procedure.