In early 2015,Conrad Corporation discovered their bookkeeper had embezzled $30,000 over the last three years at a rate of approximately $10,000 per year.Conrad also suffered uninsured hurricane damage of $40,000 late in 2015 in a presidentially declared disaster area.If Conrad wants to deduct its losses at the earliest time possible,what are the amounts (before any limitations)and year(s)of its loss deduction?

Question

Quizplus · Accepted Answer

The embezzlement loss occurred over the last three years, so it should be deducted in the earliest year possible, which is 2014. The hurricane damage occurred in 2015 and is deductible in that year. Therefore, the total loss deduction would be $70,000, with $40,000 deducted in 2015 and $30,000 deducted in 2014. Option C is the only choice that matches this answer.

In Early 2015,Conrad Corporation Discovered Their Bookkeeper Had Embezzled $30,000