LisaAnn Posted March 9, 2010 Report Share Posted March 9, 2010 Hello Everyone, A new scenerio for me, but maybe someone else came across this in the past: Taxpayer was making a cash deposit (personal, not a business) and one of the $100 bills was counterfeit. The bank, of course, after intense questioning, would not credit him for the $100. Instead, they gave him a form stating the $100 bill was counterfeit. (It also had questions that he had to answer as to the origin of the bill, if known) Can he deduct this loss on his tax return? And how would handle it? Thanks, as always, for your help. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 9, 2010 Report Share Posted March 9, 2010 >>questions that he had to answer as to the origin of the bill<< Ummmm -- I think before I give you my answer, I'd like to know what HIS answer was. If you know what I mean. Quote Link to comment Share on other sites More sharing options...
LisaAnn Posted March 9, 2010 Author Report Share Posted March 9, 2010 >>questions that he had to answer as to the origin of the bill<< Ummmm -- I think before I give you my answer, I'd like to know what HIS answer was. If you know what I mean. Nothing to worry about, he's a typical hard-working, honest guy. If he was into making these bills, I don't think he'd try to deposit it at a bank, where they are trained to spot counterfeits (at least, this teller was)......he would've probably tried to buy something at a department store. Oh by the way, it passed the marker test.....it was the teller who identified it by looking at it and touching it. Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 9, 2010 Report Share Posted March 9, 2010 He can deduct the loss if he included the $100 in gross income in the first place. On the other hand, if he reports income only as it is received, then the $100 would be excluded from gross income and there's no further deduction. Quote Link to comment Share on other sites More sharing options...
jainen Posted March 9, 2010 Report Share Posted March 9, 2010 >> If he was into making these bills<< Thanks for clearing that up, because I was thinking, like it's already included in inventory as cost of goods sold! By the way, is getting caught with funny money an ordinary and necessary business expense? Seriously, and assuming he received the bogus bucks from a customer, he should probably just back it out of sales or whatever income account it was in, similar to a returned item or a discount. If it came from a vendor, employee, or himself (even innocently) I suppose that would be different. Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 9, 2010 Report Share Posted March 9, 2010 Inventory! That hadn't crossed my mind, jainen. Thanks for the chuckle... Quote Link to comment Share on other sites More sharing options...
Pacun Posted March 10, 2010 Report Share Posted March 10, 2010 I would deduct it as worthless inventory and take a post dated check as my payment. Quote Link to comment Share on other sites More sharing options...
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