As other have suggested, Pub 590-B says no such thing. If you took a distribution from your IRA, what you did with the cash after that (other than rolling it over to another qualified retirement account within 60 days) has no effect on the tax treatment of the distribution.
If you lost the cash due to theft or fraud after you received a distribution from the IRA, that theft or fraud is an entirely separate event with respect to taxation and is only deductible if it was due to a Ponzi scheme because the deduction for other types of theft losses has been suspended until 2026.
If money was stolen from your IRA by someone managing your IRA, that just reduces the amount available to eventually be distributed. Even if you have basis in nondeductible traditional IRA contributions, the deduction for unrecoverable basis has been suspended until 2026. You can't get a deduction for money on which you never paid taxes in the first place.
