Lost

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If I have a $10 inventory item, and a $10 office supply item, and both went permanently missing, where do I deduct those on my Schedule C?

[KrisD15]

It depends, 

was this a thing you claimed as an expense in the first place? 

If so, you don't expenses it a second time when it becomes lost. 

For example, if you purchased a tape measure for work for $10, you would have claimed that 10 dollars as an expense when you bought it. 

You don't claim anything when you no longer have it, you buy another and expense the new one. 

If this is something else, like inventory, please continue the question. 

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1 of each.

[LindaS5247]

For your inventory item you could  reduce your ending inventory by the amount you paid for the inventory you lost.  There is no further deduction allowed for the inventory item since the cost value will be reported as the reduction in inventory on your Schedule C.

If the office supply that went missing was already reported as an expense on your Schedule C , (i.e. when you purchased it ... did you take an expense for it on your Schedule C?)  then there would not be a write off.  If you just purchased it for your business and lost it, it could be included as an office supply since it is only $10, but in general these losses are written off as a Casualty Loss on Form 4684.

Goods that are lost due to theft, disaster or casualty that are noninventory business property -- such as equipment, furniture or vehicles -- you must report them on IRS Form 4684. The IRS has a special publication, called the "Business Casualty, Disaster and Theft Loss Workbook," that guides you through the process of placing a deduction value on stolen items in five categories: office furniture and fixtures; information systems; motor vehicles; office supplies; and buildings, building components and land. Once you've filled out the workbook, you transfer the values to Form 4684, then use that form to figure how much to claim on your return and where to do so.

Click here for more information on the Business and Casualty Loss Disaster and Theft Loss Workbook.

Click here for IRS Topic 515 Casualty, Disaster and Theft Loss.