Part 1: Computation of deduction

Line 29: Enter the initial amount of cash or basis of property that you invested in the investment arrangement. Do not include any of the following on this line, line 30, or line 31:

amounts borrowed from the responsible group and invested in the specified fraudulent arrangement, to the extent the borrowed amounts were not repaid at the time the theft was discovered

amounts such as fees that were paid to the responsible group and deducted for federal income tax purposes

amounts reported to you (the qualified investor) as taxable income that were not included in gross income on the investor’s federal income tax returns

cash or property that you (the qualified investor) invested in a fund or other entity (separate from you (the qualified investor) for federal income tax purposes) that invested in a specified fraudulent arrangement

For definitions of responsible group, specified fraudulent arrangement, and qualified investor, see IRS Revenue Procedure 2009-20 Section 4.

Line 30: Enter the amount of cash or the basis of property that you invested after you made the initial investment (including amounts reinvested).

Line 31: Enter the total amounts of net income (for example, interest and dividends minus expenses) from the specified fraudulent arrangement that—consistent with information received from that arrangement—you included in income for federal tax purposes for all tax years before the discovery year , including tax years for which a refund is barred by the statute of limitations.

The discovery year is the tax year when one of the following occurs.

The indictment, information, or complaint described in IRS Revenue Procedure 2009-20 (as modified by IRS Revenue Procedure 2011-58), section 4.02(1) or (2) is filed.

The complaint or similar document described in IRS Revenue Procedure 2009-20 (as modified by IRS Revenue Procedure 2011-58), section 4.02(3) is filed, or the death of the lead figure occurs, whichever is later.

Line 33: Enter the total amount of cash or property that you withdrew from the investment arrangement in all years (whether designated as income or principal).

Line 34: This is the amount of your investment that is eligible for a deduction before taking into account any actual or potential recoveries.