@j0ntaxID00
The special "Ponzi scheme" loss method is only for use in the following situation:
Suppose you invest $100,000 with broker A in 2021. In January 2022, broker A sends you a 1099-B or 1099-DIV showing that your investment earned $50,000 that was reinvested. You pay income tax on the $50,000 earnings and your basis is now $150,000. In January 2023 broker A sends you a 1099 for another $50,000 of profits that were re-invested, and you pay income tax on that. In January 2024, broker A is arrested and you discover it was a Ponzi scheme, and you never had $200,000 invested. You get back $10,000. In addition to the original investment loss (invested $100,000, got back $10,000 for a $90,000 loss), you also paid tax along the way for money that never really existed. That's what the Ponzi scheme loss deduction is for.
On the other hand, if you invested $200,000, never paid tax on interim profits, and discovered you can only get back $100,000, then you have an ordinary capital loss to be reported on schedule D and form 8949, but not a Ponzi loss. The only part of the situation that would be a Ponzi loss is money that you paid tax on that never actually existed.
Let's get some basics from you.
What year did you invest and how much did you invest? Did you receive cash payouts that you paid tax on? Did you receive 1099 statements for "profits" that were "reinvested" and you paid tax on the profits that were never real? How much and in what years? How much will you recover and when?
