Cash stolen

[Gretel]

Retail biz (Schedule C) had $220 cash stolen from register. This would be a business casualty on Sch. A, right. However, I am inclined to expense this on the business books. I do not know the details yet but I assume a police report was filed. Opinions?

[Koss]

Not Schedule A

There are four types of casualty/theft losses:

(1) Personal-use property
(2) Income-producing property
(3) Property used in performing services as an employee
(4) Property used in a trade or business

For a theft of property used in a trade or business, the deductible loss carries from Form 4684 to Form 4797.

Even though your client's business is a sole prop, it is still a business, and the cash was property used in that business.

You are confusing business property with income-producing property. Income-producing property would be something like rental real estate.

I haven't answered your original question...

BMK

[Koss]

Form 4797

Your client's loss should take the following path:

Form 4684 Line 27
Form 4684 Line 29 (b)(i)
Form 4684 Line 31
Form 4797 Line 14
Form 4797 Line 18b
Form 1040 Line 14

But the instructions for Form 4684 say:

Line 31

If Form 4797, Sales of Business Property, is not otherwise required, enter the amount from this line on page 1 of your tax return, on the line identified as from Form 4797. Next to that line, enter "Form 4684."

In any case, the theft is an ordinary loss. That supports your treatment of it as an expense on the books.

BMK

[Roberts]

If stolen by an employee, maybe you should include it as an Employee Benefits program?

Personally for that amount of money, I'd probably increase the cost of goods sold with a note.

[Burke]

This thread interests me, but wouldn't whether the $220 had been declared as income or not have some bearing on its loss treatment?

[taxea]

This thread interests me, but wouldn't whether the $220 had been declared as income or not have some bearing on its loss treatment?

One would think so and if known that it was an employee it would be embezzelment...possible criminal charges....and what about attempts to recover????