being scammed consider capital loss in federal return?

[Mimi2022]

Can any tax experts kindly advise whether being scammed consider capital loss when file federal return? Thanks. 

[xmasbaby0]

Scammed in what way?   Casualty and theft losses are not deductible on a federal return since the tax laws changed for 2018 and beyond, except for certain Ponzi-type scams.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Mimi2022]

Hi, thanks very much for your kind reply. I didn't notice till today. Sorry for the late reply. I was contact by someone claimed as a financial advisor through LinkedIn. I normally very alert about scam never before had been talked into investing in cryptocurrency. But this person was extremely persistent. Even force to send "cryptocurrency' from its(not sure it is man or woman) account. Even I was nearly angry. But this person said if I don't 'accept' from my end, it will be disappeared. The person will take a lost. I felt sorry for it. So I accepted and send it back to this person. Long story short, this person persuades me open two accounts: one on a known legit platform: coinbase;  another  one is called "Ocean" app. I thought if I am the one open the accounts, nobody would be able to access, so one thing after another, I invested (I actually at that moment at very difficult moment of my life, job changing, very sick family member and much more), those are my excuse to persudge myself not go crazy being shamed and angry after I realized I got scammed. Because this person pretends directing me trough Whatsapp(how we communicate) to a big event of invest. The 2nd day this person said the market went badly, I need to put more money to rescue. That moment I woke up. I realized this must be a scam, but I didn't understand that moment how could they get my money if I have been the one handling my investment under this person's direction. As a computer science major, I realized that the only way they can scam me is through a fake website. So I told that person I will file a police report. At that moment, I didn't know this is an organized crime. The police and detective assigned to my case did research, they said there are many people being scammed by the same organization. Anyway, sorry for such long reply, thought you might need it to answer my question whether this is considered tax write off(?). The detective told me this situation can get tax credit since getting my money back is so slim of chance. These people mostly operate from all over the world. Can you please advise whether my case can be considered Captial lose or anything else that can help me a little bit. I lost my life savings. Yes, it is shame I fall for it. I never think this could happen to me since I have been very alert about scam and I am not greedy person even. Thanks for any professional advise you could give. 

[TomD8]

Per IRS Publication 544, in order to have a capital loss (or gain), you must sell or exchange a capital asset (such as cryptocurrency).

From your description of events, it doesn't appear that you ever had ownership of a capital asset.  Therefore it appears that you don't have a basis for claiming a capital loss.   

https://www.irs.gov/pub/irs-pdf/p544.pdf

Instead, you have a theft loss, as described by @xmasbaby0.

[Mimi2022]

Hi TomD8, 

Thank you for your kind reply. I was directed to bank transfer my money to Coinbase, and I was told in order to buy cryptocurrency, I need to download a website(where it does the trading. That site does show trading instantly, just like any other trading platform, It is called Ocean. So, I was directed to buy the cryptocurrency: Ether (ETH). The I was directed to how to make trade. So, that is not considered as assets?  The last trade last for a week, then I was told I had lost, in order to turn around, I need to put more money in, that is when I realized it has to be a scam. So I refused. But my account being locked in an hour (the detective on the phone with me the whole time and confirmed that I was scammed). He told me I could claim the lost money using capital lost. This is all happened Jan. 2022. I know policeman and detective (assigned to my case by the local police department since they believe this fall into a white-collar crime). So, you still think this is theft loss? If so, would you be able advise me whether theft loss quality for any tax deduction? Thank you very much for your advice in advance. By the way, the money I got to pay these "trading" was from my stock sale (19 year worth of company stock plus 2 years of my personal stocks), of course, these money totally being scammed. Do you think I still have to pay the income tax for the sales of these stock in 2022? Or by any chance, since I lost every penny of that sale, at least I got some sympathy in terms of the tax?   Sorry for the long question. Whenever at your connivence. Many thanks! 

[fanfare]

if anybody gets your crypto wallet credentials, they can move the assets.

it is gone.

the scammer set you up that way.

The police don't know very much about the US Tax Code

It's a sad tale.

IF you report the crypto loss as a capital loss, on Form 8949 Box C or Box F

you will probably get away with it.

IRS does not audit many tax returns.

They're supposed to be going after the big boys now.

@Mimi2022 

[TomD8]

This TurboTax help article may be of assistance to you:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/your-cryptocurrency-tax-guide/L4k3xiFjB

It has a section on lost or stolen crypto.

[Mimi2022]

Thank you very much for your reply, fanfare . It is very kind of you. 

[Mimi2022]

Thank you very much for your kind help, TomD8!