let's say i gave madoff 100k and he simply passed on the 100k to bob in yr 1
bob takes my 100 k pays takes on 35% so he gets 65K - the govt has to give him back the 35 k , because it is now found out that it was not income., it's a simple as that
don't forget , the clawback rule may require bob to give back 100k to the trustee because the 100k is someone else $$ , so he really may not be getting a refund
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