Madoff Victims Too Far Removed to Claim Theft Loss Deduction

A couple who suffered financially because of New York finance manager Bernie Madoff’s massive Ponzi scheme weren’t close enough to the scheme to claim part of their $17.5 million in losses on their tax returns, the Second Circuit said.

The US Court of Appeals for the Second Circuit affirmed a Tax Court ruling against Christopher and Silvana Pascucci, who invested in a fund that in turn invested in Madoff’s scheme. The court said Wednesday that the couple did not possess a sufficient property interest to claim the deduction, being several degrees removed from the disgraced fund manager’s actions.

Even if ...