I run my own handyman business. In January, someone stole my truck with all of my tools, ladder rack & topper, and torched it. Can I take some a deduction on my taxes?

[tbduvall]

I see several IRS forms referencing the theft of business property, but I am not sure of the proper way to proceed.

[Vanessa A]

Yes, you may be able to take some deductions on your tax return depending on if you received insurance reimbursement and what your cost basis in the property was. 

You will enter this by selecting the following:

1. Personal
2. Deductions and Credits
3. Casualties and Thefts under Less Common Deductions
4. Select this is income producing property.

Walk through the steps to enter the items stolen or lost.

When you do this you will be asked to enter your cost basis which is the amount you paid for it minus depreciation or expense.  So if you lost a saw that you bought in 2023 for $1,000 and took the full $1,000 depreciation in 2023, your cost basis would be $0.

However, if you purchased this saw in 2023, took a full expense on it in 2023 and the insurance reimbursed you $1,000, you would enter it in the business income section as a sale of an asset and this would be a gain on the theft of property. 

This would be entered by selecting:

1. Business
2. Business Income and Expenses
3. Sale of Business Property under Less Common Business situations. 

[tbduvall]

Well, there was no insurance reimbursement.  The truck was fully depreciated, and the individual tools were expensed at time of purchase.  I was told that for small businesses the tangible property expensing threshold is $2,500, which none of the tools exceeded, so I could expense them the year of purchase.  And if I understand you correctly, the cost basis on everything would be $0, thus no deduction.  I assumed that I would use Pub. 584-B, Business Casualty, Disaster, and Theft Loss Workbook and calculate a loss that would go on my schedule C.  I also had lost business due to lack of transportation, and I assumed that there was somewhere I could record that loss.

[Vanessa A]

Correct.  You can't take a deduction for something you already took a deduction for.  So if everything had a $0 basis, there would not be any type of deduction available for the theft. 

Your income from your Schedule C goes to Schedule 1.  This is where both the loss and your income would be reported.  

There is not a deduction for lost work.