MF Global failure creates tax crunch for farmers

Tue Feb 21, 2012 12:58pm EST
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By Tom Polansek

CHICAGO (Reuters) - With the tax man breathing down his neck, Ohio farmer Tony Rohrs is scrambling to figure out how much money he made last year in an account at MF Global.

Thousands of former clients of the failed brokerage, including farmers, cattle ranchers and investors, have not yet received tax forms that detail their profits and losses, preventing them from preparing accurate returns for the Internal Revenue Service ahead of a rapidly approaching deadline.

"I'm running out of time," said Rohrs, who faces a March 1 filing deadline like many farmers.

The collapse of MF Global, which had a large group of agricultural clients, has produced one financial frustration after another for former customers who still have not been fully reimbursed for hundreds of millions of dollars that were frozen in their accounts as a result of the firm's October 31 bankruptcy.

A trustee overseeing the bankruptcy frustrated customers by returning portions of the frozen funds in staggered amounts during the past three months and requiring them to fill out claim forms to get their own money back.

The delayed tax forms add insult to injury for many as the lack of data means some people may have to pay taxes on profits they did not really make while being unable to write off money they may never see again.

The tax forms, known as 1099s, are normally delivered around the beginning of February.

However, the trustee, James Giddens, has pushed back the deadline for mailing the forms as he investigates an estimated $1.6 billion shortfall in accounts of customers of the brokerage. He has said the firm's use of customer funds to cover corporate transactions led to the massive shortfall.   Continued...

The sign marking the MF Global Holdings Ltd. offices at 52nd Street in midtown Manhattan is seen in New York November 2, 2011. REUTERS/Shannon Stapleton