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UE Bankruptcy Personal Tax Consequences

Eggbert

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Has anyone figured out a way to declare at least a portion of one's original membership deposit as a loss on the 2010 personal return?
 

Dave M

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The answer is that unless you have consistently used your ownership as a rental (i.e., a business asset), no tax loss is allowed. Your ownership is a personal asset, just as are your car, your home, your clothes and other assets that you use in your personal life.

Even if you use it for entertaining your corporate customers, no loss is allowed. No loss is allowed in connection with a business asset used for entertainment purposes.

See my "Income Taxes and Timeshares" article in the TUG Advice section for a differently worded explanation. The rules applicable to timeshares also apply here.
 

Kagehitokiri2

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not sure if Eggbert and Mullyclu were on DC4MS, but discussions there, which included comments from attorneys and discussions on requirements for fraud, were very pessimistic.
 

Sin Till 8

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i agree with Dave ... the membership documents state that you should not consider the membership as an "investment" and that makes it exactly as Dave says ... the same as your car etc

BUT

I know that several members claimed the loss on their taxes after the T & H bankruptcy although I have no idea if they got away with the deduction without being audited

so if you are a risk taker....?
 

Mullyclu

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So, I guess the "Member Bond" I purchased in 2004 is considered a "personal asset" like Dave describes. While, I enjoyed the travel for 6 years, I am in the "pay as I go camp" now and refuse to drink the kool-aid regarding destination club memberships. Kage, I was a reader of the former site, DC4MS, but do not recall the threads on this topic...... So, if fraud were proven, (which is hasn't been I am guessing) would change this. The club did seem to take on too much reliance on new member money to keep it going for the last several years. For all I know, it may have been that way all along.
 
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Kagehitokiri2

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there was discussion, not sure if any of it had its own thread. i may have broken out some of the earlier discussion, but probably not any later discussion. there were a bunch of lengthy threads.
 

Eggbert

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Seems to be consensus

Thanks everyone for the replies. My accountant is basically saying the same thing. I really don't think there is any doubt that fraud occurred (e.g. taking out 2nd's and 3rd's on properties without notifying investors, excessive personal expense accounts, etc.) but I am not sure if anyone is fighting that battle on our behalf.
 

towerp

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The fight continues...

Eggbert - if you are referring to fraud by the original T&H gang, then yes, the Member Steering Committee from that bankruptcy has funded continuing investigations into fraud by those principals. If you're referring to the late Ultimate Escapes, I don't know if there are any actions in gear or being contemplated.
 

Sin Till 8

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eggbert~

you weren't an "investor" in the sense normally associated with that word

your membership document would specifically refer to that point and as such no notification would have been required

and also, in the case of UE, the SEC filings detailed all the mortgages on a property by property basis when they did the reverse merger around sept/oct 2009, and subsequent 10K and 10Q's updated that info

so the information was there if you knew where to look
 

Eggbert

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Fraud indeed

Sin Till 8-Actually I was investor. I was not referring exclusively to me membership dues. I, along with a handful of others, were invested in specific properties with them in separate LLC's. They violated the terms of those agreements by obtaining 2nd's, 3rd's, etc. with no notification.
 
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tax

if you can prove some fraud or other illegal acts it could help us all. maybe you can find someone to take this on however other than the tax benefits i'm not sure what else we will get....but that is a big # if you think of the # of members and our likely 0% return otherwise.
 

Sin Till 8

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Eggbert

The LLC membership documents could give you a claim against the other LLC members who took out the additional loans. When were those additional loans taken out, and did the LLC documents forbid additional debt, or just require notification of the fact? Or consent from all parties?

The answers to these questions would be needed before the extent of any claim you have could be determined.
 

Eggbert

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UE Fraud

I did seek legal counsel and they did indeed violate the terms of the LLC agreement but the cost of pursuing it and the chance I would receive anything led me to make the decision to move on. I suspect there are others in the same boat as I know I was not the only one invested in a property with them and I know their were additional liens against some of these properties. I am just floored that some of the principals involved have been able to move on to other similar ventures.
 

Sin Till 8

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based on what you are saying, I guess your original investment was made with Private Escapes
 
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