If the amount of the insurance recovery for a theft of business property is greater than the asset's fair market value but less than it's adjusted basis,a loss is recognized.

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If the insurance recovery for a theft of business property is greater than the asset's fair market value but less than its adjusted basis, a loss is recognized. This is because the amount of the insurance recovery is lower than the adjusted basis, which is the cost of the asset plus any improvements or adjustments made to it, but higher than the fair market value, which is the price at which the asset could be sold in an open market transaction. Therefore, the loss is recognized for the difference between the insurance recovery and the adjusted basis of the asset.

If the Amount of the Insurance Recovery for a Theft