Submitted By: someone
Answered: April 22, 2022 2:26 am

I was the victim of a Ponzi scheme and lost $120,000. Can I deduct this loss?

The IRS allows victims of Ponzi schemes to deduct their losses as theft losses rather than as capital losses. While thefts of personal use property are currently barred (only disaster losses are allowed), thefts of investment property remain deductible as an itemized deduction. The IRS has guidance on determining the amount and timing of the losses as well as a safe harbor for determining the year in which the loss is deemed to occur.

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Tax Glossary

Holding period

The length of time that an asset is owned and that generally determines long- or short-term capital gain treatment.

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