Can I deduct the value of my stolen diamond ring?

August 27, 2015 by Dave Du Val, EA
diamond ring

Hey Dave,

While I was working out at the gym, someone broke into my locker and stole my diamond ring. It’s my wedding ring and I always take it off before doing anything that might damage it. My husband paid ten thousand dollars for the ring last year. I filed a police report, but there are no clues about who might have taken it. Can I deduct the value of the stolen ring on my tax return?

Alison

 

Alison,

A theft of property is like a car accident, vandalism, or a weather-related disaster in the sense that it is sudden, unexpected, unusual and beyond our control. Therefore, the theft of your diamond ring does meet the IRS guidelines, and it would be a qualified loss under the Internal Revenue Code and deductible on your personal tax return.

But there is a catch. Personal losses are subject to a ten percent income limitation, so you will have your deductible loss limited to the amount that exceeds ten percent of your income. There is also a $100 limitation on this deduction, and you would need to itemize on Schedule A to receive a benefit.

Another thing to consider when reporting casualty and theft losses is insurance.  If the property was covered by insurance, you must file a claim with the insurance company, and then you would report any excess loss not covered by the insurance company as a deduction on your tax return.

Deductibly Yours,

Dave

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David E. Du Val, EA
Chief Compliance Officer for TRI Holdco

 

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972. 


 

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