Since Ponzi-type losses are out of scope for TurboTax, we can't advise how to enter them. See the link below for more information:
From <https://turbotax.response.lithium.com/console/agent/17476036?>
The document states on page 16:
7. Investment Fraud: The program does not support tax losses from investment fraud.
Ponzi schemes are a type of investment fraud. The TurboTax program doesn't support these calculations. This would include the versions that the Full Service experts are using.
If, on the other hand, you can substantiate that you have a worthless investment, you can enter that as a capital loss. See this TurboTax blog article for more information.
You can claim a casualty loss deduction using Form 4684 for Ponzi scheme losses; however, the issues of when the qualifying theft occurred and the relevant dollar amounts can be quite complex.
The TurboTax in-program guidance at a Learn More link in the Casualty Loss section states:
"We're sorry to hear about this loss. Unfortunately, this type of loss can be particularly complicated for tax purposes, and in many situations the tax treatment depends on factual determinations best handled by an attorney. TurboTax does not support tax losses from investment fraud. We recommend consulting a tax professional if you've experienced this situation."
The IRS Instructions for Form 4684 explain how to report a theft loss deduction for a Ponzi-type investment scheme.
See this IRS webpage for more information for taxpayers affected by Ponzi scheme losses.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
