Posted By:
Bob CasmerClint,
How a theft loss is treated for tax purposes depends on if it is for business assets (ie: a dealer's inventory) or for personal assets (a hobbyist's collection). Assuming you are more interested in the personal side, the loss comes under the Casualty and Theft loss rules of the IRS. The theft loss is determined as the lesser of the fair market value or the adjusted basis (ie: what you paid for it) of the items stolen. The amount of loss is then reduced by any insurance proceeds you receive. Any remaining loss, after insurance proceeds are received, must be at least $100 and, it must also exceed 10% of your Adjusted Gross Income (AGI) on your tax return to be deductible. It ultimately gets reported on Schedule A (Itemized Deductions) on your 1040 federal tax return.