A contract for a future service that you pay for establishes that relationship. That reply does not agree with the facts presented. The poster said that this was a travel agency that declared bankruptcy.
It is a THEFT loss because a theft loss includes embezzlement. @mjkuhn suffered a loss because the travel agent embezzled the money NOT because the travel agency filed bankruptcy. The proximate cause was the crime of embezzlement and that's how the IRS would view this. If you want to give advice that would likely get posters on this board in trouble then be my guest. Not a good idea though.
