IRS Drops Crypto Scam Victims' Tax Bill After Thefts Total $965K

The IRS has reached an agreement with a New York couple that they no longer owe taxes or penalties on their theft loss deduction related to a cryptocurrency investment scam.

Brian and Lucy Leidy had previously been denied $965,000 in theft loss deductions for the 2022 tax year due to the scam, which involved 'pig butchering', a type of cryptocurrency investment scam where victims are coerced into transferring their funds to fraudulent platforms.

The couple contested this decision and nearly $67,000 in penalties. After filing a petition three months prior, the parties agreed that there is indeed a valid theft loss deduction for Lucy's losses in the scam.