Hello, Diana. Please feel free to use my dedicated link to ask the questions, because they will get to me easier.
http://www.justanswer.com/finance/expert-myvirtualcpa/ 1. Increase cost of goods sold on schedule c, but if you do this you can't also claim a casualty loss. IF you received any reimbursement, add it to gross income.
2. You can alternatively deduct the loss by removing the inventory from the schedule C cost of goods sold by making a downward adjustment to open inventory or purchases,Reduce the loss by any reimbursement you received, and so you do not include the reimbursement in gross income.
Thanks again for asking for me! It's been fun working with you. I'm ready to do a lot more, if you have the questions to ask.
It is not one of the options.
report loss on Sch D as an investment sale, sales price 0 and purchase price is the basis
Form 4684 and no adj on Sch C
form 4797 sales price is 0 and purchase price is th basis
No additional tax form required and no adj on Sch C