I had some funds held in trust by a financial company. Due to malfeasance customer funds went missing and the company went bankrupt. The bankruptcy is going through its course and it looks like the creditors such as myself will get back some fraction of their funds.
How do I treat this from a tax perspective? For example, let's say I get back 40% of my funds. Is the 60% I lost considered a deductible loss of some kind?