Yes, you can claim the loss. Because the product was part of your business (we assume that your loss was in connection with your on-going business), this would be part of your inventory, and would increase your cost of goods sold, and decreases your gross income from your business.
This goes in the Business section, under Inventory/Cost of Goods Sold. When you keep an inventory, you report your beginning inventory for the year and your ending inventory for the year, and you enter your purchases for the year. So anything like damages that reduces your Ending Inventory is going to increase your Cost of Goods Sold, and lower your profit.
To enter into TurboTax online, go to the Income & Expenses section. Use the Search function (upper right of page) and enter Schedule C. Click on the jump-to link for Schedule C and after entering your income, TurboTax will ask about expenses. Scroll down the page and select Inventory. If you don't see Inventory, click on the drop down arrow to open additional categories of expenses. After opening the Inventory section, enter your information concerning the lost/damaged product.
In TurboTax desktop, select Business, then Business Income and Expenses. Lastly, select Inventory/Cost of Goods Sold.
@4fitz
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
