Prentice Halls Federal Taxation 2015 Comprehensive
Quiz 8: I: Losses and Bad Debts
A Taxpayer May Deduct a Loss Resulting from the Theft
A taxpayer may deduct a loss resulting from the theft of business and investment property but not a theft of personal-use property.
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When business property involved in a casualty is totally destroyed,the amount of the loss is limited to the lesser of the taxpayer's adjusted basis in the property or the reduction in FMV.
In the case of casualty losses of personal-use property,the losses sustained in each separate casualty are reduced by both $100 and 10 percent of the taxpayer's AGI for the year.
A theft loss is deducted in the year in which the theft is discovered.
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