Can I deduct Losses from Internet Scam of Fraudulent Financial Scam ?

Forum|Forum|1 year ago
December 15, 2024
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I will have to pay Taxes on my Rollover IRA Sale, that I would have otherwise not done

Best answer by xmasbaby0

No. Losses from theft or fraud are not deductible on your federal tax return unless they were the result of a Ponzi scheme.

xmasbaby0Answer

Employee

No. Losses from theft or fraud are not deductible on your federal tax return unless they were the result of a Ponzi scheme.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

sajan122

"The IRS released a legal memorandum concluding that some scam victims can still take theft loss deductions despite the Tax Cuts and Jobs Act’s limitation on personal losses.

The January 17 memo (ILM [removed]), released March 14, determined that taxpayers who were cheated in their attempts to invest could take advantage of the theft loss provision for “transactions entered into for profit” and wouldn’t be limited by the TCJA’s restriction on personal casualty losses."

My question is -- does anyone know when Form 4684 will be updated to allow the loss of scam losses

Mike9241

we don't know if you are eligible to use the Ponzi loss safe harbor set forth in Rev. Proc. 2009-20, 2009-14 I.R.B. 749, as modified by Rev. Proc. 2011-58, 2011-50 I.R.B. 849. to be able to use these because there is the requirement that conduct of the Scammer meet the requirements that the theft loss result from a specified fraudulent arrangement that is operated by a lead figure who is indicted or the subject of a criminal complaint under state or Federal law. Additionally,

for qualified Ponzi losses section C pf Form 4684 would be completed otherwise section B

you'll find the Turbotax link under Deductions and credits > Other deductions and credits > casualties and theft. (it doesn't handle PONZI type losses well)