Discussion:Jewwlry theft $20,000..no proof of basis...

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Discussion Forum Index --> Basic Tax Questions --> Jewwlry theft $20,000..no proof of basis...


Discussion Forum Index --> Tax Questions --> Jewwlry theft $20,000..no proof of basis...

Dbfs (talk|edits) said:

28 March 2013
client had a jewelry theft last year; filed a police report and insurance claim. insurance reimbursed her for about 10% of the FMV of the loss. she has NO proof of her basis in these items. Are you gonna deduct anything for this loss? I say zero; no proof of basis, no deduction for loss. Just curious how others would treat loss.

thanks don

Southparkcpa (talk|edits) said:

28 March 2013
If its a client I believe and I believe they are telling the truth. I would do it.

I would ask them to sign a letter stating they would need proof under audit etc. Proof and truth are 2 different things. I haven't filed a loss in 25 years as my clients AGI in general wont allow it but thats my theory on receipts versus truth. If I think its a fabrication..NEVER would I do it.

Southparkcpa (talk|edits) said:

28 March 2013
edit...I would inquire as to why the insurance claim differs from the FMV etc and THAT would play a big role in my decision.

Death&Taxes (talk|edits) said:

28 March 2013
From observation, most clients don't buy riders for their jewelry and thus most homeowners policies place a strict limit on that category.

PHIL MOODY (talk|edits) said:

28 March 2013
Was a value included in her police report?

Filing false reports to police, I think is criminal. That should be something to consider.

Taxea (talk|edits) said:

28 March 2013
If this is not costume jewelry surely the jeweler it was purchased from may be able to provide the original invoice for a start. If any of the items were gifts a notarized statement of cost from the giver would help in documenting the basis. If she wants to do the "leg work" she can probably even send an amended loss report to the insurance company.

Kevinh5 (talk|edits) said:

29 March 2013
The jewelry may have been purchased and recieved as a gift over 40 or 50 years, TaxEA. Not just the latest 5 years.

Ckenefick (talk|edits) said:

29 March 2013
What if she had stolen the jewelry, didn't report FMV as income, and is now taking a loss...wouldn't the original owner have also taken a loss, thereby resulting in a double deduction?

Taxea (talk|edits) said:

29 March 2013
Kevin, just as an example, Rolex watches have serial numbers. My step-dad purchased one that was stolen and 50 years after the purchase Rolex was able to provide the serial and model design.

I know that generally good business practice is to maintain documents for minimum of 5 years but in some cases they are archieved rather than completely disposed of. Also that is why I suggested getting the cost from the giftor...when one spends thousands for an item the usually remember what they paid for it and maybe even the timing if it was for a special occasion. I would be willing to bet that Richard Burton would remember the entire purchase circumstances when he purchased the Hope Diamond for Dame Elizabeth. Another source would be a jewelry appraiser if there are good photos of the items. I could go on.....

Dbfs (talk|edits) said:

29 March 2013
Thanks to all the replies; I appreciate the feedback from everyone. These purchases occurred over many years. I have asked her to contact the places of purchase, her checkbook and her credit card statements to support her basis.

Unless the client can provide me with documentation that can support her basis as the deduction, I am not going to go with the deduction. Thanks, Don

Kevinh5 (talk|edits) said:

29 March 2013
Laura, we're talking 20,000 total here from a lifetime of accumulation. No Rolexes.

Death&Taxes (talk|edits) said:

29 March 2013
The lesson here is to schedule your jewelry with your insurer and pay extra for the coverage. The IRS is a lousy co-insurer.

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