Theft-loss deduction
Plain definition. The IRS covers the theft loss deduction in Publication 547, which lists it as a limited deduction and addresses losses from Ponzi-type investment schemes and financial scams. The IRS covers it in Publication 547 and says the deduction is limited.
Technical definition. The IRS’s Publication 547 covers theft alongside casualty losses. It states that the theft loss deduction is limited, and it separately addresses mislaid or lost property, declines in the market value of stock, losses from Ponzi-type investment schemes and losses from financial scams. The publication also sets rules for theft loss proof, for figuring a loss from the fair market value of stolen property and recovered stolen property, and for safe harbor methods for determining casualty and theft losses.
On this site
On this site, Theft-loss deduction comes up in What happened in the September 2026 Bitget theft, and were customers’ funds affected? and Can I deduct crypto I lost to a scam?.
Source
Publication 547 (2025), Casualties, Disasters, and Thefts | Internal Revenue Service (irs.gov), read October 1, 2026.