Robbery

[S T]

Convenience Store, was robbed, merchandise was multitude of cartons of cigarettes, cost value of $2,500+

Do I adjust inventory for the theft, or report on 4684? (Partnership Return form 1065)

Sorry, I always have a problem with this issue

Thanks,

Sandy

[BHoffman]

Loss of Inventory
Here's a snip from Pub 538:

"You claim a casualty or theft loss of inventory, including items you hold for sale to customers, through the increase in the cost of goods sold by properly reporting your opening and closing inventories. You cannot claim the loss again as a casualty or theft loss. Any insurance or other reimbursement you receive for the loss is taxable.

You can choose to claim the loss separately as a casualty or theft loss. If you claim the loss separately, adjust opening inventory or purchases to eliminate the loss items and avoid counting the loss twice.

If you claim the loss separately, reduce the loss by the reimbursement you receive or expect to receive. If you do not receive the reimbursement by the end of the year, you cannot claim a loss for any amounts you reasonably expect to recover.

Forgiveness of indebtedness by creditors or suppliers. If your creditors or suppliers forgive part of what you owe them because of your inventory loss, this amount is treated as taxable income."

[S T]

You are the Greatest

B-
Always to my rescue! Thanks so much, I am marking this for future reference so I don't have to ask the same question again!

Sandy

[BHoffman]

Glad to help. I was rescued myself today by a kindly soul regarding a software issue I was having.

[Snaggletooth]

Routine

As usual, Ms. Hoffman has supplied information with authentic credentials, and has opened the door to report this in two different ways.

But I would not go to the extra trouble to claim a casualty loss. I believe the most
helpful and direct deduction for this is to let it fall out as cost of goods sold.

Additionally, I believe a casualty loss should be restricted to extremely uncommon, sudden and catastrophic events. A theft in a convenience store, even to the extent of $2500, is unfortunately commonplace. All such stores have theft, even if it is so minor as shoplifting.

I get the same question with a cow that dies. Any farmer with 35 head of cattle will average a loss of one cow per year. Certainly is not an "uncommon" event.

[BHoffman]

Well the pubs aren't exactly the authority that the IRC provides, but I get a terrible headache when I have to read those

Agree with the write off. "Inventory Shrinkage" was the first thing I thought of.