claiming deduction for crypto scam

Forum|Forum|11 months ago
April 11, 2025
1 reply
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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.

taxtattooAuthor

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.