The proof-of-loss your crypto-scam clients can’t produce alone.
Your opinion letter is only as strong as the evidence beneath it. We build that evidence — reproducible, block-hash anchored, and written to survive an examiner.
We are not tax practitioners and we do not compete with you. We produce forensic documentation. Eligibility, characterisation, and filing are your determinations — we will not make them, and we will not advise your client on them.
The opening, and the problem inside it
You know this file better than we do, so briefly, and with the caveats attached. CCA 202511015 (dated January 17, 2025; released March 14, 2025) analysed five scam victims and concluded three could deduct and two could not — the line being whether the transfer was “a transaction entered into for profit” under §165(c)(2), which survives the §165(h)(5) limitation that disallows most personal casualty and theft losses. The romance and kidnapping scenarios failed on profit motive. Notably, the memo treats a transfer made “to safeguard existing investments” as profit-motivated “regardless of any intermediate steps taken at the direction of Scammer A” — which reaches the ordinary impersonation fact pattern.
The §165(h)(5) limitation was made permanent by 2025 legislation, so §165(c)(2) is the standing route rather than a sunsetting one. And it is worth saying plainly that a CCA is not precedent and may not be cited as authority — the memo itself notes the advice is non-taxpayer-specific and “dependent on the taxpayer’s specific facts.”
You already know the exposure that creates. The deduction lives or dies on documentation, and a crypto-scam client typically arrives with a story, a spreadsheet, and a folder of screenshots. None of that establishes where the funds went, the year discovery coincided with no reasonable prospect of recovery, or that a theft occurred under applicable state law rather than a bad investment.
Two practical points that shape the engagement:
1. Basis, not the dashboard. §165(b) limits the loss to the client’s basis; the memo is explicit that a taxpayer may not deduct “the unrealized gain from an investment” never taken into income. Clients arrive anchored to the fabricated balance. Establishing basis is a reconstruction problem — and it is the half of the file we are built for.
2. The Rev. Proc. 2009-20 safe harbor generally won’t reach these facts. It requires a lead figure indicted or criminally charged; in the analysed scenarios the scammer’s identity was unknown and the safe harbor was held inapplicable. Without it the claim rests on the ordinary §165 elements and the evidence beneath them — which is precisely where a documented chain of custody stops being a nicety.
Tax law moves. Confirm the current position before relying on any of the above — the citations are in the footer so you can go to source rather than take ours.
What we supply
One thing, done properly.
We reconstruct where the client’s money actually went — hop by hop, from permanent on-chain data and public record — and preserve it as a reproducible chain of custody.
Block hashes and all. You, your client, or the IRS can re-run it and reach the same answer. That reproducibility is the property that makes it evidence rather than assertion, and it is the reason we publish methodology instead of a proprietary score.
How we work with you
We document; you decide and file.
We produce the forensic proof-of-loss the §165 claim and the opinion letter stand on. We do not give tax advice or determine eligibility — that is your judgment, and it stays yours.
Reproducible, not “trust us.”
Methodology-transparent and independently re-runnable. Built for the file, and for an audit. If our work cannot be checked by someone who doesn’t like the answer, it isn’t worth putting in front of an examiner.
Every finding is graded.
We separate proven from probable from unresolvable, explicitly, in the report. An examiner will find the soft spots either way — it is materially better that they are labelled by us, in advance, than discovered under scrutiny.
No recovery theater.
Traced is not recovered. We never promise money back and never charge an upfront “recovery” fee. Your client has usually already been approached by someone who does; we are the opposite of that call.
The first conversation is free.
Send a fact pattern to scope. If documentation wouldn’t materially help the claim, we will tell you that rather than take the work.
What “graded” means in practice
Every line in a report carries its own evidentiary tier. This is the part that holds up under questioning.
| Tier | What it means | Example |
|---|---|---|
| PROVEN | A public, reproducible chain fact. Anyone can re-derive it from permanent data. | A transfer occurred, of this amount, in this block, at this timestamp. |
| LEAD | Probabilistic or metadata-derived. Investigative only — never presented as established. | A clustering pattern consistent with common control of two addresses. |
| PENDING | Unresolvable from public data alone. Needs legal process, an exchange record, or a KYC boundary. | The legal identity behind a receiving address at a custodial exchange. |
A report that cannot say “this is not established” is not being careful, it is being useless — because the tier it can’t express is exactly the one an examiner will press on. We would rather hand you a smaller set of findings that hold than a larger set that doesn’t.
When we’re a fit — and when we’re not
Good fit: a client who sent crypto to an investment or trading platform that turned out to be fraudulent, where the on-chain trail exists and the loss is material enough to justify documenting properly.
Poor fit: a loss with no on-chain component; a market loss the client is hoping to recharacterise; or a situation where the documentation cost would exceed the benefit. We will say so on the first call.
Refer a client, or send a fact pattern to scope.
The first conversation is free, and it is with the person who does the work. If we can’t help your client, we’ll tell you that instead of taking the engagement.