IRS Reverses Ruling on Crypto Scam Loss Deduction for NY Couple
The US Tax Court recently made a ruling in favor of a New York couple who were victims of a cryptocurrency investment scam. Brian and Lucy Leidy had previously been denied their $965,000 theft loss deduction by the IRS, but the court agreed with them that it should not have been disallowed.
The couple claimed they were coerced into transferring their IRA funds to a fraudulent platform as part of a 'pig butchering' scam. This type of scam involves convincing victims to invest in cryptocurrency and then coercing them into transferring their funds to the scammers' control.
The court's decision means that the Leidys will not owe taxes or penalties on the theft loss deduction. They had also contested almost $67,000 in penalties imposed by the IRS.