In early 2017, 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 2017 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 should be deducted in the year discovered, which was 2017. The hurricane loss should be deducted in the year it occurred, which was also 2017. Therefore, the total deductible losses for 2017 are $30,000 (embezzlement) + $40,000 (hurricane damage) = $70,000. The losses cannot be deducted in 2016 or 2015 as they did not occur or were not discovered in those years. Therefore, option C is the correct choice.

In Early 2017, Conrad Corporation Discovered Their Bookkeeper Had Embezzled