question.jpgIn Federal Income Tax

What is a theft loss?

A theft loss is where someone takes and your money or property, intending to deprive you of it. To be deductible, such a theft must be illegal in the state where it happened. Theft loss can result from things such as blackmail, burglary, extortion, embezzlement, larceny, robbery, threats and kidnapping for ransom. You cannot generally deduct a loss as theft where property was simply misplaced, although you may be able to deduct it as a casualty loss if the property was lost or misplaced because of a sudden, unexpected or unusual event. Finally, to claim a theft loss, you should have records proving that a theft occurred and establishing the values of the property.