IRS Deudctions
 

Theft Loss

What theft losses are tax deductible? (Definition of Theft)

Under the tax law, a theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the laws of the state where it occurred and must have been done with criminal intent.

Examples of theft

Theft includes crimes such as:

  • Blackmail
  • Burglary
  • Embezzlement
  • Extortion
  • Kidnapping
  • Robbery

Theft does not include the simple disappearance of money or property because you lost or mislaid it.  But, the accidental loss of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected, or unusual.

What are not considered theft losses (and therefore are not tax deductible)?

Theft does not include the simple disappearance of money or property because you lost or mislaid it. But the accidental loss of property can qualify as a casualty if it results from an identifiable event that is sudden, unexpected or unusual.

How to prove a theft loss?

In order to prove a theft loss, your records must show all of the following:

  • The date you discovered your property was missing

     

  • That your property was stolen

     

  • That you were the owner of the property

     

  • Whether a claim for reimbursement exists and there is a reasonable expectation of payment

 

The best record is a police report. Notify the police of any theft of your property.