Irving Picard, Madoff bankruptcy trustee, claims he can only locate one of Bernie's returns, the 2007 one. I can think of one reason why he might not be looking too hard for it.  Bernie and Ruth will probably have a big tax liability and Ruth would have to pay it out of her money which means less money for legal fees.

Or maybe Bernie and Ruth did not file prior year tax returns and, in that case, Ruth is in big trouble with the IRS. 

Who has David Friehling's papers? If he did the return, he probably has copies. Picard could also obtain copies from the IRS if he was so inclined. 

Don't think Picard wouldn't do a favor for Sorkin by not locating the other returns. When it comes to fees, the lawyers all work together.

Most people don't know about the corporate bankruptcy racket going on at the Southern District of NY Bankruptcy Court. The object is not to protect the creditor but to run up fees to the extent of funds are available. The lawyers, trustees, judges, everybody works hand in hand. That's why the lawyers from out of town like to file in NYC.

Ever wonder why the Enron case was moved to the Southern District? You never heard who got the valuable Enron assets, did you? There were no disputes, it went smooth as butter.

Has anyone heard of any creditors awarded anything substantial from a bankruptcy case lately? 

Getting back to Bernie and Ruth, the return is posted  at Scribd. What caught my attention is the $6 million deduction for charitable contributions.

I only recently found out that the Madoffs had two foundations. The Madoff Family Foundation, EIN 13-3934626, is posted at the Foundation Center's 990 Finder. Here is a link to the 2007 990 . 

In 2006, the Madoffs moved $17 million from Cohmad Securitie to BMIS. Even if the funds had were really in Cohmad's custody, they disappeared into the BMIS sinkhole. I'm not a tax expert but I am guessing that means the deduction for the $17 million has to be taken in as income.

I don't know the name of the second foundation so I can't find the 990s. If Madoff is in the name, the 990 is not filed at the 990 Finder and I think I checked Guidestar already. I have no idea why the Madoffs had a second foundation or when it was founded. I can't imagine the $5.4 million deduction is legitimate.   

If the $5 million is in a separate bank account somewhere, I assume Picard knows about it.

I haven't heard if Picard has clawed back the $2 million from Mark Madoff's foundation but I would think he would. That probably goes ditto for the $4 million in Andrew's foundation.  

I don't know why the $7 million contribution was disallowed and what entity it was originally contributed to but that is a big deduction to lose.

If there are any tax experts interested in the Madoff case, could you drop me a line? Or post a quick comment?

Update: A tax expert fascinated by fraud was kind enough to send this comment:

Tax Code Sec. 170(b)(1)(A) limits the charitable contribution deduction in any one year to 50% of "Adjusted Gross Income" (the bottom line number on Form 1040 p. 1.) That's why Bernie's $6,631,353 deduction in '07 is exactly half of the $13,262,706 shown for his AGI.
 
Contributions above this limit aren't lost, but instead are transferred to the next year's tax return. A carryforward expires if not used within 4 years. That may be why the detail attachment to Schedule A line 16 shows "2005 Carryover contributions" of $5,712,834 -- presumably an amount transferred from an earlier year. The "disallowed cash contribution" of $7,803,213 on that attachment seems to be the amount in excess of the 50% limit for '07 that would transfer to BM's year 2008 return.
 
If the IRS were really on the ball, they might ask if any of the charities like "BLM $5,415,535" or "Mark Madoff Foundation $2,000,000" were "private foundations" not supported by the general public. Contributions to these organizations are limited to 30% of ones AGI in any particular year. Or maybe some of the donations (if they were indeed real) were of capital gains property, such as stock held > 1 year. A 30% limit kicks in here as well, while gifts of capital gains property to a private foundation hit a 20% of AGI annual cap. [These contribution caps are nested like Russian dolls.]
 
I wonder where Schedules C ("Business income" $9.4mm) and D ("Capital Gains" $1.3mm) went. They don't seem to be on Scribd. And where is the Form 1116 detail for the foreign income and foreign tax paid that would support BM taking $818,780 of foreign tax credits to reduce his US tax?

Either David Friehling, ace tax accountant, never prepared the missing Schedules C and D and Form 116 or Picard held them back because they revealed something he wanted to keep under wraps such as evidence of other assets or businesses. 

 My guess is Mr. Picard only released the tax return to show that Paul J, Konigsberg did not prepare it.