Question

Vivian Walker (AGI of $25,000) has a personal coin collection (acquired 8 years ago) that has a fair market value of $9,000 and a basis of $6,000. The collection is stolen by a burglar. Vivian’s insurance pays her $2,900 for the theft loss. Use Form 4684, Casualties and Thefts, on Page 5-25 to report Vivian’s deduction.

Answer 1

  Calculation of Loss from stolen coins

As per IRS, if the property of the person is stolen then the fair market value of such property should be zero as the same is not available with the person. As a result in the given case, market value will be assumed to be zero even if are provided the fair market value at $9,000.

Loss from stolen coins = Adjusted Basis in the property - Insurance recovered.

= 6,000 - 2,900 = $3,100

Such theft loss remaining after insurance reimbursement is first required to be subtracted by $100.

Loss from theft = $3,100 - 100 = $3,000

Moreover such loss should be more than 10% of the AGI of the person.

Deduction of Theft = Loss from Theft - 10% of AGI

= 3,000 - (25,000 x 10%)

= $500

Vivian's deduction in form 4684 = $500