claiming deduction for crypto scam

[taxtattoo]

LInk to IRS.gov In other words pig butchering scam.

Is it possible to claim the deduction as a theft if the intention was for a profit transaction?

Per this link, it is allowed: https://www.irs.gov/pub/irs-wd/202511015.pdf

Wanted to get inputs from other tax pros.

[rjs]

In most cases there is no deduction for theft loss. The recently published Chief Counsel Memorandum provides a possible exception, but it's very complex and involves a lot of legal technicalities. You have to consult a tax attorney (not a CPA) who can review all the details of your particular situation and advise you as to whether you qualify for the deduction.

[taxtattoo]

But the recently published document with a date of 3/14/25 clearly says a deduction is allowed.  The pig butchering scam listed in the document is the exact scam I was a target. The article does not mention anything complex. What am I missing?

Thanks!

[rjs]

One thing that you're missing is a law degree. The situation might not be a simple as you think. I don't know what else you might be missing because (a) I am not a lawyer, and (b) I don't know any of the details of the scheme you lost money on. Just saying that it was "pig butchering" is not nearly enough detail. And don't bother posting more details, because no one here is going to give you legal advice. Talk to a tax lawyer.

[rudys1014]

RJS:   You are simply mistaken as the IRS memorandum clearly establishes that the tax loss deduction is available if certain conditions, including whether the account was undertaken for profit, are satisfied.  Unlike you, I am a licensed attorney with a background in tax law, accounting and finance.   Please don’t mislead people with your misunderstanding of the IRS memorandum.