Couple years ago I had lend some amount of money to my mother via SWIFT, and I have records for this transaction. She does not live in the US (She is not resident of the US either), and her bank account has been opened in the country where she lives.

Unfortunately phone scammers who presented their self as government officials deceived my mother and forced her to withdrawn money that I send from her bank account, and took it.

I have a police report of this incident, and there is a law suit on going. I found this IRS publication IRS loss deduction regarding this issue, but I could not make sure if I am able to deduct this loss.

Can I deduct this loss from my year 2016 tax return? If so which return software/website is suitable for this issue?

  • 1
    The loss was not yours but rather, your mother's. – ChrisInEdmonton Mar 22 '16 at 14:34
  • Seems like it would be your mother's loss, not yours, from an IRS point of view. Your loss would come when your lent money was not repaid, though I doubt that's deductible under the above scenario. – Joe Mar 22 '16 at 14:35
  • @Joe Thanks for your comment. As far as I can remember from the police report. There is a statement from my mother: "...it was my son's money... ." Can this statement be used as a proof to show the loss is mine? – albin Mar 22 '16 at 15:22
  • The loss is not yours. If the money is in her account, you either gave or lent it to her. The money is not yours any more than money in your bank account is the property of your mortgage holder; any theft that occurred would not impact their books except if you failed to pay your mortgage as a result, and that would affect them exactly the same as if you'd lost your job. – Joe Mar 22 '16 at 15:44
  • @Joe If the bank account had been opened as a joint account (for both me and my mother), at than time could I have claimed the loss as mine? – albin Mar 22 '16 at 15:56

I can't see how you can deduct your mother's loss. The money was not stolen from you, and you gave money to your mother of your own free will and with full intention of the money to be used by her as she wishes.

Moving money from your own account to a joint account allowing the joint holder to use it - is akin to giving the money directly to the joint holder, i.e.: in your case, giving a gift to your mother.

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