@ftadrowski - VERY hard to folllow what you are stating.
sounds like 2 outgoing checks were never deposited by subcontractors - because they were stolen and can I assume they were cashed? (so the money left your bank account?)
then you paid the subcontractors AGAIN in 2022, so the subs were 'whole' but you were still missing the money on the stolen checks.
Then you were paid back by the banks in 2023.
What loss are you trying to claim? you were made whole!!!!
I guess you could argue to take the loss for the stolen checks in 2022 (because that was cash out of your business), but if you do that you would need to report the bank's compensation back to you as revenue in 2023.
If you were confident you were going to get reimbursed by the banks, I don't see there is any loss or any timing difference.
<<The money was recorded coming in as a receipt. >> this is the revenue from your client, right? it has nothing to do with the situation.
