If your client is a cash basis taxpayer and was owed wages that were never paid, he has no basis in that loss and receives no deduction, since the measure of the loss is the lower of fmv or basis. The only consolation for the taxpayer is that the W-2 he receives should not include those unpaid wages, so he doesn't pay tax on them, but also doesn't receive the cash.

If your client was paid the wages, but made a loan to the employer of the net pay so the employer recorded a loan payable to your client and not simply accrued wages payable, then the facts are different and there would be a different answer. Can you tell whether the 2024 W-2 includes the wages?