I am reporting it in other deductions; it was cash in the bank stolen by a person who had ability to write checks, do banking, whatever. Police report was filed but charges were dropped for the person to go into drug rehab.

I could write it off from gross income or other deductions. I know the rules and the deductibilities but this is truely a loss from embezzlement, so please if you will, just tell me where you would take it...page 1 or schedule for other deductions :)

asked 15 Jul '10, 18:34

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SandySea
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I think I would take it as a deduction also. Just remember, IF (and yes, I've done these cases) there is restitution, it will be taxable income.

And if you want to add insult to injury, either issue a 1099-MISC or add it in as embezzlement - John Doe 123-45-6789. :)

Helen, EA in PA

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answered 16 Jul '10, 00:54

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Helen EA in PA
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Yes thanks Helen! I thought so too. No chance of reimbursement, but indeed will pick it up as ordinary income. :)

(16 Jul '10, 15:24) SandySea

Embezzlement is theft. As such, it should be reported on Form 4684 (Casualties and Thefts), Section B (Business use property).

The loss gets carried to form 4797 line 14. If form 4797 is not otherwise required, it carries to the main form directly, on the 4797 line with the notation "form 4684". (For an 1120, this would be line 9.)

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answered 16 Jul '10, 13:47

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While Revenue Ruling 2009-9 pertains to the Madoff issue, it provides an excellent summary of code section 165. I agree with Tom that technically Form 4684 should be used.

(21 Aug '10, 20:07) Rick 1

I think you should read up on the rules to see if it is a considered a casulty loss. Was there insurance reimbursement? If not, you could also look at a civil suit posibility to get a judgement to collect and it would potentially become a bad debt. I do not think other expenses is the best choice though.

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answered 15 Jul '10, 19:09

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Elizabeth R
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No insurance reimbursement; theft of company funds due to idiocy of client. I don't know where to place it but have read since it is dollar for dollar (cash funds) then other deductions is appropriate. Is ordinary income/loss but for a reduction with a note to 1120 for the theft or to be reported as other deductions? Again, I know the rules and the applicability of the loss, so just want to know where you are going to report it (against gross income or as other deductions). Thank you Elizabeth!

(15 Jul '10, 20:09) SandySea

That's all right , except it's actually line 19 for the 1120-S

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answered 20 Jan, 14:48

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Asked: 15 Jul '10, 18:34

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Last updated: 20 Jan, 14:48