I have a client (S Corp) who claims a theft took place at his warehouse and he lost about 40k worth of equipment. The equipment is not on the books, nor any depreciation been taken in prior year. How would you deduct his expense on 1120S? I believe I should first book the asset in the current year (2018 already filed). Then complete Form 4684 and include loss (50/50 husband and wife on Schedule K). Can someone tell me if this would be enough? Also, the client does not have any invoices or itemized list of the items stolen. He says he can prepare a list with estimated Cost and determine the adjusted basis. He does not have a police report in his possession. Any thought would be appreciated.