Investment Theft Losses
Have you or one of your client's lost money as a victim of investment fraud? The burden is on the taxpayer to prove investment theft and in turn that they’re eligible for a theft loss deduction. Investment Theft Losses is a CPE course on IRC 165. This course will teach tax professionals and CPAs to either make an investment theft loss filing on behalf of their client or to seek the help of a firm that specializes in assisting in making the claim. This course will help professional tax preparers and CPAs understand why and how to claim a special accelerated tax deduction on their Federal and State Income tax returns in the event of investment theft loss. Because this deduction has become popular only recently, there are misunderstandings and misinterpretations that need to be addressed before an informed decision can be made regarding the benefits of IRC Section 165.

Course Publication Date: June 11, 2012

This course is available with NO ADDITIONAL FEE if you have an active self study membership or can be purchased for $80.00!

Author:Steven Adler
Course No:TAX-12-0060 Del
Recommended CPE:10.00
Delivery Method:QAS Self Study
Level of Knowledge:Basic
Recommended Field of Study:Taxes
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Learning Objectives
  • Understanding the definition of “Theft” for the purposes of claiming a tax deduction under IRC Section 165(c)(2).
  • Know how to use an Investment Theft Loss to reduce ordinary Income.
  • Understand the appropriate tax year to claim the deduction.
  • Learn what documents are required to satisfy the “burden of Proof” to claim the deduction.
  • Know what to do when some recover takes place after the deduction has taken place
  • Know where to reference the Tax Code that pertains to Investment Theft Losses.
  • Know how to reference what losses are Covered Under Section 165.
  • Know what losses are subject to tax deductions.
  • Understand the specific distinction between Casualty, Disaster Losses and Investment Theft Losses.
  • Know the reference to the Exclusion Allowances for Section 165(c)(3).
  • Know how to reference the exception to the Exclusion Allowance for Investment Theft.
  • Know what and when important changes in the law that have taken place with respect to Section 165 (c)(2).
  • Know how to calculate the financial benefits of a Section 165(c)(2) deductions compared to a Capital Loss Deduction.
  • Understand what actions comprise theft under Section 165(c)(2).
  • The importance of “criminal intent” in defining a theft loss.
  • Understand what is meant by “targeting” and investor for theft deduction purposes.
  • Know what is meant by a “non-business transaction” under Section 165(c)(2).
  • Understand that a deduction can not be claimed unless there is “no reasonable prospect of recovery.”
  • Know what is meant by the “year of discovery” for claiming a tax deduction.
  • Understand how to compute the actual loss amount to be deducted from income.
  • Know what documentation is required by the IRS to substantiate a theft loss deduction.
  • How to calculate the fair market value and what alternatives are available to the taxpayer.
  • How to calculate the adjusted cost basis.
  • To learn how to apply “net operating losses” to theft loss deductions.
  • Know what interest is due on refunds of theft loss deductions.
  • Understand how to claim a loss for state income taxes.
  • Understanding what is necessary to substantiate a theft loss in order to claim the deduction.
  • To know how to provide a Theft Loss Report that would be a response to an IRS, IDR request.
  • A completed IRS Form 4684 illustrated.
  • Learn what entries are necessary on Form 1040 Schedule A.
  • To understand the IRS Revenue Ruling that defines how to determine if the facts that caused the loss would satisfy the Code.
  • To know what the IRS means when they say the victim must have been targeted by the culprit.
  • To understand what the IRS means when they require the taxpayer “to ascertain there is no reasonable prospect of recovery”.
  • To know what year the taxpayer may make the claim for a deduction.
  • To understand what is the “burden of proof” the taxpayer must meet to be entitled to a deduction.
  • To understand what “substantiation” is required to meet the burden of proof.
  • To provide the experiences taxpayers had presenting their claim for a deduction in court.

CPE Depot Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

Sponsor Number: 109423


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