My client was scammed and removed over $200K from her retirement and it was stolen. Can she get a tax write off?

"For tax years 2018 through 2025, individual taxpayers with theft losses are allowed a deduction if the loss is due to theft related to a transaction entered into for profit."

See how far you can stretch that . . .

Section 165 allows personal casualty losses, 2017-2025, to the extent there are "personal casualty gains."  It's difficult to stretch the IRA withdrawals into that category, but maybe not impossible.  I would not roll over and admit defeat too quickly on this one.  Especially when IRS may be short of auditors by the time the return is filed.  

They have no money, between the 2 of them they only make about $32,000 a year and this year maybe less since he retired in the Spring just before this happened.  They are brutally honest.  I remember one year he was delivering Pizzas as a side job and after filing she called me and said they had to file an amended return because they miscalculated his tips and he had something like $22 more they had to claim.  This was long before they put tips on the W-2.  I am thinking of telling them to reach out for an Offer in Compromise, or maybe to the TaxPayer Advocate.  I don't think they would want me to be sneaky on the tax return, or at least with them knowing.  But I'm honest with my clients and it would be hard to do that without telling them.  My heart is just breaking.  They took everything, their retirement accounts, a savings CD they had, and all the money in their checking and savings.  I am sad she didn't reach out to someone but she said she was embarrassed that they were on the dark web "buying Russian child porn" and didn't want anyone to know...even though they weren't, and she honestly believed the people "helping" her.  😞