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Publication 547


A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. You don't need to show a conviction for theft.
Theft includes the taking of money or property by the following means. The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law.

Decline in market value of stock.(p3)

You can't deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. You report a capital loss on Schedule D (Form 1040). For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Pub. 550.

Mislaid or lost property.(p3)

The simple disappearance of money or property isn't a theft. However, an accidental loss or disappearance of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual. Sudden, unexpected, and unusual events were defined earlier under Casualty.


A car door is accidentally slammed on your hand, breaking the setting of your diamond ring. The diamond falls from the ring and is never found. The loss of the diamond is a casualty.

Losses from Ponzi-type investment schemes.(p3)

The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes: If you qualify to use Rev. Proc. 2009-20, as modified by Rev. Proc. 2011-58, and you choose to follow the procedures in the guidance, first fill out Section C of Form 4684 to determine the amount to enter on Section B, line 28. Skip lines 19 to 27, but you must fill out Section B, lines 29 to 39, as appropriate. Section C of Form 4684 replaces Appendix A in Rev. Proc. 2009-20. You don't need to complete Appendix A. For more information, see the above revenue ruling and revenue procedures, and the Instructions for Form 4684.
If you choose not to use the procedures in Rev. Proc. 2009-20, as modified by Rev. Proc. 2011-58, you may claim your theft loss by filling out Section B, lines 19 to 39, as appropriate.