Check out this IRS Revenue Procedure 2009-20 specifically for theft losses due to investment schemes, this is a optional Safe Harbor treatment using Form 4684. Bottom line: you can deduct 75% of the qualified investment if recovery is possible, 95% if not.
https://www.irs.gov/pub/irs-drop/rp-09-20.pdf
A qualified investor that uses the safe harbor treatment described in section 5 of this revenue procedure must – 9
(1) Mark "Revenue Procedure 2009-20" at the top of the Form 4684, Casualties and Thefts, for the federal income tax return for the discovery year. The taxpayer must enter the “deductible theft loss” amount from line 10 in Part II of Appendix A of this revenue procedure on line 34, section B, Part I, of the Form 4684 and should not complete the remainder of section B, Part I, of the Form 4684;
(2) Complete and sign the statement provided in Appendix A of this revenue procedure; and (3) Attach the executed statement provided in Appendix A of this revenue procedure to the qualified investor’s timely filed (including extensions) federal income tax return for the discovery year. Notwithstanding the preceding sentence, if, before April 17, 2009, the taxpayer has filed a return for the discovery year or an amended return for a prior year that is inconsistent with the safe harbor treatment provided by this revenue procedure, the taxpayer must indicate this fact on the executed statement and must attach the statement to the return (or amended return) for the discovery year that is consistent with the safe harbor treatment provided by this revenue procedure and that is filed on or before May 15, 2009. .02
By executing the statement provided in Appendix A of this revenue procedure, the taxpayer agrees—
(1) Not to deduct in the discovery year any amount of the theft loss in excess of the deduction permitted by section 5 of this revenue procedure; 10 (2) Not to file returns or amended returns to exclude or recharacterize income reported with respect to the investment arrangement in taxable years preceding the discovery year; (3) Not to apply the alternative computation in § 1341 with respect to the theft loss deduction allowed by this revenue procedure; and (4) Not to apply the doctrine of equitable recoupment or the mitigation provisions in §§ 1311-1314 with respect to income from the investment arrangement that was reported in taxable years that are otherwise barred by the period of limitations on filing a claim for refund under § 6511.
