Interest Int Received but no payment received

[ccristman]

I have a new client that received two 1099-Int forms for around $100,000. This interest is interest that they were supposed to receive for an investment they received but they did not actually get the interest. They were victims of a Ponzi scheme that just came to light this in 2023. I understand that they cannot take a loss except in the year this is discovered and when they have no reasonable expectation to get their money back but, is there a way to back out the interest on their 2022 return that they never received? I've called the IRS but they just send me to their website and I've not been able to locate guidance.

[Uncle Sam]

See if this helps you: https://www.irs.gov/newsroom/help-fo...stment-schemes

[ccristman]

So, it's handled as a carry back. Interesting. I still see this as something that is going to set off lots of communication with the IRS on this return going forward.

[Lion]

Build that into your price, or have a separate engagement letter/price for each task.