Theft Losses

Forum|Forum|3 months ago
March 10, 2026
3 replies
13 views

Hello All:

I have client who was scammed into purchasing gift cards. The client has a police report. I have tried to enter the amount of theft by deception into form 4684. I have not been able to get the loss amount to flow over to Schedule A.

I have seen some guidelines that say a casualty loss can not be deducted unless it was part of a Federal Declared Disaster.

This is my 1st time with this type of loss. Any advice will be greatly appreciated.

Thanks

Tentman

ProSeries Basic

Accountant-Man

Level 13

The law changed.

** I'm still a champion... of the world! Even without The Lounge.

Skylane

Intuit Community Champion

The only permissible theft deduction is a Ponzi scheme. As @Accountant-Man stated the law changed.

If at first you don’t succeed…..find a workaround

T

Terry53029

Intuit Community Champion

You can still take a loss for an investment scam entered into for a profit.

The Chief Counsel memo affirms that taxpayers who are victims of scams may claim a theft loss deduction under IRC § 165, but only if their situation meets specific conditions:

The loss must result from criminal conduct classified as theft under applicable state law;
The taxpayer must have no reasonable prospect of recovering the stolen funds; and
The loss must arise from a transaction entered into for profit.

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