Greed is good. At least that’s what the IRS says when it comes to taking a theft loss deduction for losses arising from scams.
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Losses resulting from scams that rely on the victim’s greed can be deductible.
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Losses resulting from scams that rely on the victim’s desire for love or to help others are not deductible.
Sound crazy? That’s the world we’re living in.
What Is a Theft Loss?
A theft loss results from the illegal taking of money or property, including by
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robbery,
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embezzlement,
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larceny, or
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fraud.
The theft must have been illegal under state or federal law and been done with criminal intent. But a conviction for theft is not required—it’s not even necessary for anyone to be charged with a crime.
The victim’s records should show all the following:
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That the victim was the owner of the property
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That the victim’s property was stolen
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When the victim discovered that the property was missing
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Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery
The victim should report the theft to the police. But the victim is not required to obtain the identification of the scammer if it’s otherwise unknown. Nor does the victim have to bring a legal action if the evidence is insufficient to sustain a ... Log in to view full article.