Lost money on a stock fraud? No tax loss for you!

Let's say you poured your life savings into shares of Enron stock and lost $250,000. You'd like to use that for the tax loss but you run into a small problem: You can only use $3,000 of that loss per year to offset your gains. You'll need to live another 83 years to use your full tax loss!

There's a rule that should allow people to get around this: people who lose money to theft can deduct the entire value of the loss from their income, carry it back to claim refunds for two prior years, and carry it forward to offset income for the next 20 years.

But you won't be able to count that Enron loss as theft. According to Forbes, the IRS has issued a memo explaining the limitations on claiming a theft loss: you can't count a theft loss if you bought the securities on the open market. If you bought them directly from the issuer, or the broker was involved in the scheme somehow, you might have a case. For most investors, that won't help.

I'm trying to understand the rationale behind this and, I must say, I'm coming up short. There's an argument that allowing investors to take theft losses in cases of fraud would lead to people taking advantage: if a company settles charges with the SEC over options backdating, could an investor claim theft loss, even though the stock went down because of issues not related to the "fraud"?

I don't have a solution to this, but there has to be some alternative to telling victims of fraud that they'll have to hang around for another 83 years to take advantage of the tax loss.