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Silver tax lining for business theft losses

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in Small Business Tax

Q. We found out that one of our office workers stole about $500 from petty cash. Can we deduct the loss? M.T.V., Pittsburgh

A. Yes. As with a personal theft loss, the amount of the loss is generally treated as a deductible casualty and theft loss, reduced by the amount of any insurance reimbursements. But you could run into a problem if the IRS ever challenges your claim. Keep copies of police reports and other supporting documentation.

Unlike personal casualty and theft losses, no limits apply to business theft losses. For 2010, personal losses, reduced by $100 per event (down from $500 in 2009), are deductible to the extent they exceed 10% of AGI.

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