This is incorrect. You do not need to live in a federally declared disaster area to claim and deduct a casualty loss from a Ponzi-type theft.
The issue is more one of providing the IRS with sufficient substantiation to support your assertion that a bona fide crime took place. Court records, criminal complaints, and detailed records of the crime will all be required. Be prepared for scrutiny depending on how large the loss is in relation to your annual income.
At least you referenced the correct section of the Code (Rev. Proc. 2009-20), but please do not opine if you didn’t read or understand it.
