How to Deduct Theft of Bearer Bonds
In 1982, the Congress made the issuance of new bearer bonds illegal in the United States. Nonetheless, you can still purchase those issued by other countries. Like the theft of other property, you can deduct your losses on your income tax returns. However, because the issuance of bearer bonds was in part made illegal because they were a popular vehicle for tax fraud, you should consult with an accountant or tax attorney before deducting them on your tax return.
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Instructions
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Complete Internal Revenue Service Form 4684 Part B. You will need to be able to describe the bonds. For example by their face value, serial number and issuer. Deduct any amount of insurance on the bonds from your total losses. Completing the form is different depending upon whether you had the stolen bearer bonds for over a year or not. The instructions on the form will tell you how to do the calculations, which are different depending upon the amount of your losses and the total amount of your taxable income.
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Enter the results from Form 4684 Part B on Form 1040 Schedule A, Line 20. Complete the rest of Schedule A.
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Enter the results from Schedule A on Form 1040 Line 40, itemized deductions. Complete the rest of your 1040 normally.
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Tips & Warnings
Even though bearer bonds are the property of the holder, a thief cannot be a proper holder.
If you misplaced or lost the bonds, you cannot deduct them as theft on your taxes.
Follow the advice of your tax attorney or accountant when attempting to deduct the theft of bearer bonds. Even if you ordinarily complete your own tax returns, in this situation, you should hire a professional.
