Taxpayers who suffered theft losses and casualty losses are eligible to claim ordinary losses in the right situation, including:
- Ponzi Scheme theft losses. If you lose money in a Ponzi Scheme, you may be eligible to claim an ordinary theft loss. In 2009, the IRS provided guidance on how taxpayers may claim such loss. Although developed in response to the Madoff Ponzi scheme, the rules apply to all taxpayers and all Ponzi and similar schemes.
- Casualty losses. A casualty loss is, in general, a loss of property suffered from an accident, such as a car accident; an accident in the home that damages the home, furniture, artwork or other property; flooding damage; or any other type of accident causing damage to personal property. Casualty losses are subject to severe limitations. Most significantly, the casualty loss is then only deductible to the extent it exceeds 10% of a taxpayer’s adjusted gross income (AGI).