Property manager ran away with security deposit

[huanludesign]

Hello! Our property manager disappeared with tenant's security deposit. We (landlord) paid our tenant the security deposit. We wonder how would this income be reflected in tax return? Should it be counted as "loss"? Could it counted as one month of rent deducted from our rental income?

The property manager also ran away with one month of rent. We are also curious how this money should be reflected in the tax return?

Thanks~

Joyce 

[tagteam]

Duplicate post.

[Carl]

Seems that all three duplicate posts are marked as such, with no useful reply on any of them. That's what happens sometimes when you post the same query more than once.

Our property manager disappeared with tenant's security deposit.

Did you pay back the security deposit to the tenant? If yes, then simply subtract it from the rental income you will be reporting for the tax year.  If no, then do nothing.

The property manager also ran away with one month of rent.

Then "YOU" don't report that month's rent as income is all.

[tagteam]

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@Carl wrote:

The property manager also ran away with one month of rent.

Then "YOU" don't report that month's rent as income is all.

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That would be incorrect from the standpoint of the law of agency; receipt by an agent (the property manager) constitutes receipt by the principal @huanludesign.

[Carl]

receipt by an agent (the property manager) constitutes receipt by the principal

Ummmmm... even when the agent outright steals it?

[tagteam]

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@Carl wrote:

receipt by an agent (the property manager) constitutes receipt by the principal

Ummmmm... even when the agent outright steals it?

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Yes, even when the agent "outright steals it".

Technically, this is embezzlement since the property manager came into lawful possession of the funds (rent and/or security deposit) prior to misappropriating them.

[huanludesign]

Thanks! We did pay the tenant back the money. Should we deduct it from "operational cost"?