ETHICAL DILEMMA #3 Tax - not left at a store or on the...

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Jordan Evans ETHICAL DILEMMA #3 – DUE NOVEMBER 15 Theft losses of personal use assets are itemized deductions in the year of discovery. The taxpayer must show that the property was actually stolen. Losses due to mislaying or losing property cannot be deducted. If there is no positive proof that a theft occurred, all of the details and evidence should be presented. If the reasonable inferences point to a theft, the Tax Court has allowed a deduction. If the inferences point to a mysterious (unexplained) disappearance, however, the deduction will be disallowed. A taxpayer went shopping in a major city, riding the subway to and from the city. During the day, he purchased items using money from his wallet. When he arrived home, his wallet was missing. He is considering claiming a theft loss deduction for the wallet and the money it contained. Evaluate what the taxpayer should do. In this situation the taxpayer should first check everywhere to make sure it was stolen and
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Unformatted text preview: not left at a store or on the subway. The man could have lost the wallet himself and be trying to deduct it as stolen property. If the wallet comes up stolen he should value the worth of the wallet and its contents. When considering the value of the money inside I would only consider what was remaining after spending money throughout the day. Proving the theft of the wallet would be very difficult to prove, especially on a major city subway. If the man believed he had enough proof and was certain the wallet was stolen then he would use that evidence for the tax courts to make a decision on whether or not to allow the theft loss deduction. There are three possible outcomes: him being able to deduct both the wallet and cash, him only being able to deduct the value of the wallet and third, being unable to deduct anything due to a failure to present proof....
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