My husband is a victim of the Ponzi-Scheme investment. He invested 500K in 2022 which created a huge tax burden on Federal and MA state income taxes. He could not get a penny out of his investment account to pay for the huge amount of tax a few weeks ago. That was the time he realized that it was a scam. The investment group/company is registered in UK but operated in Hong Kong.
Questions:
What is the correct procedure to write off a Ponzi-Scheme investment lost in our personal income tax?
Do we need to report the scam to any agencies before submitting Form 4684 to the IRS to claim the scam lost?
If we do, what are the correct agencies we need to report to? In Federal and MA state?
Please advise. Many Thanks!
