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Abstract

Traditionally, the theft loss deduction for Federal income tax was limited in several ways. The limitations included requiring that the theft be considered a theft under the state law in which the theft occurred and that there be direct privity between the person committing the theft and the person against whom the theft occurred. The restrictions have made it hard to use the theft loss deduction in most securities fraud cases. This Article examines the history of the theft loss deduction and recent changes that may show a relaxing of some of these restrictions, and how these changes may impact allowing for the theft loss deduction in securities fraud cases.

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