Did some more research. Here are two additional links with pretty good information:
http://www.pac-c.org/tax%20relief.htmhttp://blogs.tampabay.com/money/2007/07/taking-a-tax-de.htmlI did some more investigation into my own personal situation and it turns out I didn't lose enough (or I made too much elsewise) to take a take deduction here. But here are a couple important notes for the rest of you in case you qualify:
- You must itemize to take a casualty or theft loss deduction.
- You can only deduct the amount you lost and were not reimbursed beyond $100 PLUS 10% of your AGI. So if you gave LVZ $20,000, got back $12,000 from the courts, and have $75,000 in adjusted gross income this year, you could deduct only $400.
- You have to ascertain the fair market value of your gemstones before and after the theft/fraud. After is easy enough - take it to a jeweler who will tell you it's worth $1. Before is tougher. I would think you could argue it was worth what you paid for it but maybe not - you'll need to do some more investigation into past court cases and see what they decided to do. If you can establish a precedent I would think you'd be ok, otherwise the IRS may say you just overpaid for a cheap heirloom.
Again, not professional advice here, just posting what I think I've learned.