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Get your taxes done using TurboTax
I was told that the IRS announced special relief for victims of fraudulent investment arrangements. Investors can take an ordinary loss deduction and the deduction isn't subject to the pre-2018/post-2025 2%-of-adjusted-gross -income (AGI) limit on miscellaneous itemized deductions, the income-based limitation on itemized deductions, or the 10% of AGI limitation on the deduction for casualty losses.
Taxpayers can deduct the loss in the year the theft was discovered. This deduction can be taken if the loss isn't covered by a claim for reimbursement or other recovery that has a reasonable chance of occurring.
According to IRS, the amount of the theft loss is determined by adding to the amount of the initial investment any additional investments and any amounts the taxpayer reported as income and reinvested, minus any amounts withdrawn over the years and any reimbursements or likely recovery.
If anyone can confirm this and let us know HOW to take this deduction, that would be greatly appreciated.