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Madoff Fraud Victim’s Estate Can Seek Refund in Tax Court

Bernard Madoff’s fraud might have been detected with enough due diligence in mid-2006, more than two years before the Ponzi scheme collapsed, a U.S. Tax Court judge ruled. That means it’s possible, Judge Diane Kroupa said, that the estate of a New York man who died that year is entitled to a $1.9 million refund for death taxes paid on his $4.8 million Madoff account — an account revealed to be worthless after the fraud was uncovered. Kroupa, in a decision May 21, didn’t assess the likelihood that Bernard Kessel’s estate can prove its case. She did say, though, that it can try to do so at a Tax Court trial where lawyers may iron out a new wrinkle in the financial mess created by Madoff’s crimes. Other challenges to estate taxes on Madoff accounts are under administrative appeal at the IRS, Stephen Krass, a New York attorney representing the estate. More on Bloomberg here.

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