Hi,
I am a victim of a couple of PONZI schemes. I was recently advised that I can claim "theft" on my tax return and deduct the amount lost. Since I've already filed, I'd have to do this as an amendment, but before doing so, I wanted some advice. Is this legal? What documentation do I have to provide? Any downside or words of caution?

You have been the victim of a COUPLE of Ponzi schemes?

I'm posting here because I want to see the other answers. Here is the explanation of the law which I found: http://www.usatoday.com/money/perfi/taxes/2009-03-17-madoff-irs_N.htm. It seems somewhat complicated.

I'll leave the final answer to the experts who actually know.