RECEIVERSHIP OF DIVERSIFIED LENDING GROUP, INC. AND APPLIED EQUITIES, INC.
Notice re 2009 Income Tax Matters The Receiver is advised that historically, payments made to or on behalf of investors in Diversified Lending Group ("DLG") were identified as principal or interest, based on the terms of contract agreements with DLG. Shortly after the appointment of the Receiver in early 2009, it became apparent that the financial condition of DLG would prohibit it from adhering to the terms of contracts with investors. This condition existed at least as early as January 1, 2009. As a result of the financial condition of DLG, effective January 1, 2009, all payments made to or on behalf of investors in DLG are to be treated as return of principal. No part of any such payments will be treated as interest payments to investors. Therefore, no Form 1099 will be issued to the IRS for payments made to or on behalf of DLG investors in 2009.
[10/12/10] As Receiver, I cannot give investors tax advice. An investor recently suggested that I post information to investors of the existence of IRS Revenue Ruling 2009-9 and Revenue Procedure 2009-20, which may be of interest to their financial advisors. That investor suggests also that investors should track the progress of Senate Bill 3166 which she says will give relief to people who suffered losses in non taxable IRA accounts. I am happy to accommodate that investor, but, again, do not represent or warrant the accuracy of the foregoing and again suggest that investors need advice from taxation professionals.
[12/21/12] Tax Treatment of 2012 Distributions
The Receiver continues to be in a position where he cannot give tax advice to investors or other creditors. Some people have asked what kind of report they can expect from the Receiver as to distributions made to them in 2012.
The Receiver presently intends to issue IRS 1099-R forms for investors with investments held in IRA-type accounts. As the records available to the Receiver are insufficient to determine if funds were contributed on a pre-tax or post-tax basis, the 1099-R Form will show the distribution amount, but the taxable amount of the distribution will not be reported and the Form 1099-R will be marked as “Taxable amount not determined.” Investors will need to check with their own tax advisor to determine what is taxable to them. No 1099 form will be issued to those investors whose investments were not held in an IRA- type account, as the Receiver is advised that these distributions were simply a return of principal and do not have a reportable component.
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