Some Ponzi scheme victims may get more tax relief for their losses since the IRS issued Revenue Procedure (abbrev. Rev Proc) 2011-58 which modifies one issued over two years ago, Rev Proc 2009-20
Ponzi Scheme victims have had the option of treating their losses as theft losses instead of capital losses if the loss in question was qualified. In general, a qualified loss was only incurred if the lead figure of the scheme was the subject of a federal or state criminal complaint or the right sort of civil proceeding. If the lead figure died before the complaint was filed, then the loss wasn't qualified.
Rev Proc 2011-58 broadens the definition of a "qualified loss." Now, the limit described in the preceding paragraph has been removed under certain circumstances.
There is a bunch of other technical gobbledygook in the new Rev Proc and the one it modified so don't rely on this post to justify claiming a deduction. However, if you or someone you love was taken advantage of in a Ponzi scheme (also known as pyramid scheme) then it might be worth while to buy an hour or two of time from a qualified tax professional.
Most of us, by the way, will talk about an issue like this at no charge for a half hour or so to filter out at least some of the folks who clearly aren't going to get a useful deduction. Note, however, there are no guarantees. At the end of the freebee 30 minutes the tax pro might not be sure whether the prospective client has a "qualified loss." At that point, the person with the loss may have to decide whether to start paying for the tax pro's time to get a final answer.
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