Business expenses

cypress429 — Fri, 02 Apr 2021 20:51:03 GMT

I was hired to fly a client's drone. The drone was stolen from my car. The loss was not insured. I bought the client a replacement drone. Can I deduct the cost of the replacement? If so, how?

Re: Business expenses

ColeenD3 — Sat, 03 Apr 2021 14:18:58 GMT

Please see this answer from AnnetteB.

There is not a specific area within the business income and expenses portion of your return to enter business related cash theft on your Schedule C, but there is a place to put it.

Before you deduct the cash theft, there are a few things to note:

You can only deduct it in the year that the loss was discovered.
It is also not deductible if you have a claim for reimbursement and a reasonable expectation for recovery.
If it has not yet been determined whether you can expect to recover the loss, then you should not deduct it on the return you are currently filing. If later it is determined that it will not be recovered, then you can file an amended return to claim the loss.

Also, there are some documentation requirements that you must meet in order to claim the loss. Keep this documentation with your records. It should include the following:

When the loss was discovered
Information that the property (cash) was indeed stolen
That you are the owner of the stolen property
Whether a claim for reimbursement exists with a reasonable expectation of recovery

To enter the information about the cash theft into your Schedule C within TurboTax, use these steps (using the Home & Business version of TurboTax):

Go to Business > Business Income and Expenses > Profit or Loss from Business
Click Update or Edit beside Profit or Loss from Business
On the summary page listing the business(es), click Edit beside the business that had the theft
Scroll to the Business Expenses section, click Update or Edit beside Other Common Business Expenses
Scroll to the bottom of the screen and click Update or Edit beside Other Miscellaneous Expenses
This will allow you to enter a short description and an amount for the cash theft you incurred
Click Continue and the total amount will be included on Schedule C line 48 as an itemized list and then it will also transfer to Schedule C line 27a

Re: Business expenses

cypress4291 — Thu, 15 Apr 2021 22:05:41 GMT

I was not the owner of the stolen property. It belonged to my client, as does the replacement drone I purchased. But I am the one who paid for the replacement. Can I deduct that cost?

Re: Business expenses

JeffreyR77 — Thu, 15 Apr 2021 22:23:27 GMT

The theft occurred from your business. You should follow the steps described by @ColeenD3 to deduct the expense on your return.

Re: Business expenses

cypress4291 — Tue, 27 Apr 2021 20:30:56 GMT

Thanks to you both!

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