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t9v4p3l2
New Member

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

This would be a theft/casualty itemized deduction.  I have good documentation, legal help, and know this a grey area for audit.
1 Best answer

Accepted Solutions
SweetieJean
Level 15

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

See IRS Tax Topic Number: 515 - Casualty, Disaster, and Theft Losses -  https://www.irs.gov/taxtopics/tc500/tc515

Individuals are required to claim their casualty and theft losses as an itemized deduction on  Form 1040, Schedule A (PDF) Itemized Deductions .  For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year. 

For example - If you had a loss due to the flood of $88,000 and your Adjusted Gross Income was $250,000 then your deductible loss reported on Schedule A would be $250,000 -88,000 8,000 - $5,000 - $100 = $2,900.  Then your Total itemized deductions reported on Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

See IRS Tax Topic Number: 515 - Casualty, Disaster, and Theft Losses -  https://www.irs.gov/taxtopics/tc500/tc515

Individuals are required to claim their casualty and theft losses as an itemized deduction on  Form 1040, Schedule A (PDF) Itemized Deductions .  For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year. 

For example - If you had a loss due to the flood of $88,000 and your Adjusted Gross Income was $250,000, then your deductible loss reported on Schedule A would be $88,000 - $25,000 - $100 = $62,900.  

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5 Replies
SweetieJean
Level 15

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

Was this for a personal property, or a rental one?
t9v4p3l2
New Member

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

My primary residence, personal not rental
SweetieJean
Level 15

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

I hope you filed a police report.
macuser_22
Level 15

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

And you must have either sued the contractor or be able to prove (to the IRS) that even if you did sue that the judgement would not be recoverable such as the contractor filed for bankruptcy, is insolvent or other reason that it would be uncollectable.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
SweetieJean
Level 15

I was defrauded of $88,000 by a contractor in 2017. I think this can be deducted from my 2017 IRA withdrawal of $215,000 (age 67) to cut taxes. Correct?

See IRS Tax Topic Number: 515 - Casualty, Disaster, and Theft Losses -  https://www.irs.gov/taxtopics/tc500/tc515

Individuals are required to claim their casualty and theft losses as an itemized deduction on  Form 1040, Schedule A (PDF) Itemized Deductions .  For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year. 

For example - If you had a loss due to the flood of $88,000 and your Adjusted Gross Income was $250,000 then your deductible loss reported on Schedule A would be $250,000 -88,000 8,000 - $5,000 - $100 = $2,900.  Then your Total itemized deductions reported on Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

See IRS Tax Topic Number: 515 - Casualty, Disaster, and Theft Losses -  https://www.irs.gov/taxtopics/tc500/tc515

Individuals are required to claim their casualty and theft losses as an itemized deduction on  Form 1040, Schedule A (PDF) Itemized Deductions .  For property held by you for personal use, you must subtract $100 from each casualty or theft event that occurred during the year after you've subtracted any salvage value and any insurance or other reimbursement. Then add up all those amounts and subtract 10% of your adjusted gross income from that total to calculate your allowable casualty and theft losses for the year. 

For example - If you had a loss due to the flood of $88,000 and your Adjusted Gross Income was $250,000, then your deductible loss reported on Schedule A would be $88,000 - $25,000 - $100 = $62,900.  

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