If the investment was part of your business activity, you may be able to report the loss as a business-related scam loss. Business-related scam losses may qualify as ordinary and necessary business expenses if they are directly tied to business operations
Key Points to Consider:
- Documentation: Keep detailed records of the fraudulent investment, including any communications, transaction records, and reports to authorities.
- Form 4684: You need to use Form 4684, "Casualties and Thefts," to report the loss. This form is used to calculate and report casualty and theft losses.
- Schedule C: If the investment was part of your business, you might need to report the loss on Schedule C (Form 1040), "Profit or Loss from Business."
Important Note:
Personal financial losses from scams are generally not deductible unless they result from a federally declared disaster. This means you can only report the loss if it is business-related.
Form 4684 is not yet available in TurboTax. You can check the availability of Form 4684 in TurboTax by visiting their Forms Availability page for updates. Once it becomes available, TurboTax can guide your through the steps to report the theft as a business loss.
IRS Guidelines:
For more detailed information on reporting business-related scam losses, you can refer to the IRS guidelines:
