Lost Tech Investments Don’t Support Theft Loss Tax Deduction

The former director of a failed technology partnership isn’t entitled to deduct his lost investments and legal defense fees because he failed to show himself to be a fraud victim, the US Tax Court said Wednesday.

Michael Shaut began investing in Downing Investment Partners LLP in 2014, eventually becoming its managing director while making several loans to the business that he says were never repaid. Downing investors determined in 2016 that the firm’s principals were misleading them and mismanaging the business, resulting in approximately 17 lawsuits naming Shaut as a defendant.

Shaut told the Tax Court that he was among ...