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Level 1

Question

PONZI Scheme Loss

Forum|Forum|3 years ago
January 30, 2023
2 replies
25 views

There appears to be many different opinions on whether a Ponzi scheme loss can be deducted or not. My loss was $65,000 in 2022. Can the loss be deducted or not?

Thanks,

Level 15

From the IRS.

https://www.irs.gov/newsroom/help-for-victims-of-ponzi-investment-schemes

Level 15

there are some tricky rules but yes it is deductible. it's reported on form 4684. there are certain elections that need to be made. use the casualty and theft worksheet and review rev proc 2009-20 (scroll down to get to it) to see if you want to use it

https://www.irs.gov/irb/2009-14_IRB#RR-2009-9

section C of 4684 is when you use the Rev Proc

read page 7 of the 4684 instructions

https://www.irs.gov/forms-pubs/about-form-4684

Mike9241