The IRS has extended a safe harbor for investors who claim theft loss deductions from fraudulent investment arrangements, such as Ponzi schemes, even when the leading figure behind the fraud has died.
Rev. Proc. 2011-58 modifies an earlier revenue procedure, Rev. Proc. 2009-20, 2009-1 C.B. 749, which provides an optional safe harbor allowing certain investors to claim a theft loss deduction for qualified losses from specified fraudulent investment arrangements for which authorities have charged the lead figure by indictment, information, or criminal complaint with a crime that meets the definition of theft for purposes of Section 165 of the Tax Code.
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