Washington — The Internal Revenue Service will disallow deductions for theft losses claimed by taxpayers with respect to decreases in the market value of stock purchased in the open market that may be attributable to the fraudulent misrepresentations or other illegal misconduct of corporate officials.
The Treasury Department and the IRS have issued Notice 2004-37, noting that some taxpayers have been advised — in the media and elsewhere — that they may deduct decreases in the market value of their stock as theft losses if they were caused by misrepresentations made by corporate officials about the financial condition of the corporation, or other illegal misconduct of corporate officials.
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