Crank Posted February 14, 2010 Report Share Posted February 14, 2010 Client claims he had approx. $44K on deposit with a financial institution (Advanta Corp) which filed Ch 11 in November 2009 and voted to liquidate assets in Jan 2010. He also received a 1099-int for interest earned in 2009 which was not collected but rolled over into the $44k. I havent found anything to indicate that this was a federally insured (FDIC) institution. According to news articles, "Nothing is available for shareholders and it is unclear at the present time if any creditors will receive anything". I have yet to see any of his documentation. If this is the case I presume for 2009 taxes we can get a Sch D cap loss on the $44k and he must still claim the 1099 interest on sch B. Also, if any money is recouped in the future would it be treated as ordinary income? Quote Link to comment Share on other sites More sharing options...
Crank Posted February 14, 2010 Author Report Share Posted February 14, 2010 Anyone have any thoughts on this? Quote Link to comment Share on other sites More sharing options...
JRS Posted February 14, 2010 Report Share Posted February 14, 2010 I don't have any quick answers, but on the bottom of their website the following is in the fine print: © 2000-09 Advanta Corp. All rights reserved. Advanta and the Advanta logo are registered service marks owned by Advanta Corp. Advanta Business Cards are issued by Advanta Bank Corp., Member FDIC. Quote Link to comment Share on other sites More sharing options...
Crank Posted February 14, 2010 Author Report Share Posted February 14, 2010 TYVM, Wow how inthe world did I miss that. Quote Link to comment Share on other sites More sharing options...
MontanaEA Posted February 14, 2010 Report Share Posted February 14, 2010 TYVM, Wow how inthe world did I miss that. See IRS Pub 550, pg 6 "Interest income on frozen deposits" Quote Link to comment Share on other sites More sharing options...
Crank Posted February 14, 2010 Author Report Share Posted February 14, 2010 Great! Thank you very much. Quote Link to comment Share on other sites More sharing options...
Crank Posted March 19, 2010 Author Report Share Posted March 19, 2010 Can anyone tell me how to handle the loss on deposit at a financial insitiution (non FDIC insured) and interest on frozen deposits for Pennsylvania purposes? I cant report the intereset on frozen deposits as a negative Sch B item (as required for the federal 1040 sch A/B ) because ATX doesnt allow overides to PA SCH A/B. Im leaning to reporting the princial and interest as a PA Sch D item. Thanks Quote Link to comment Share on other sites More sharing options...
10SorTAX Posted March 20, 2010 Report Share Posted March 20, 2010 There's no "Adjustment to Box 1" with the "J-Other" code on the 1099-Int? That puts the numbers correctly on the Sch B without overriding. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 21, 2010 Report Share Posted March 21, 2010 >>Member FDIC<< Being a member of FDIC does NOT mean that any particular account is insured. These days pretty much anything paying more than a penny is not covered. Quote Link to comment Share on other sites More sharing options...
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