Tax consequences to an individual whose stock, securities or other property lose value by reason of a crime may be significantly affected by whether the losses "arise…from theft" within the meaning of Internal Revenue Code (IRC) Section 165(c).

A loss not compensated for by insurance or otherwise is allowable, in general, as a deduction under Section 165(a), but that rule is subject to numerous limitations. Among those limitations is that, if the loss is attributable to a capital asset, and realized through a sale or exchange, it will be a capital loss and therefore deductible (above a de minimis amount) only to the extent of capital gains.

A non-business loss of an individual (not realized through a sale of property) will generally be classified as an "itemized deduction" under IRC Section 63(d) and—if it does not qualify as a casualty or theft loss—as a "miscellaneous itemized deduction" under IRC Section 67(b). Miscellaneous itemized deductions are not allowable at all through 2025, and the deduction for a "personal casualty loss"—that is, a casualty or theft loss of property not connected with a trade or business or a transaction entered into for profit—is generally limited through 2025 to losses attributable to a "federally declared disaster" (see IRC Section 165(h)).