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This is a deductible loss under Section 165.
There are several possibilities and I suggest that you sit down and go over your specific facts and circusmtances with a qualified local CPA or tax attorney.
Generally, you can elect to treat the loss as a casualty or theft loss. Using this treatment allows a deduction but the deduction will be less than the entire amount because of the various limitations that come into play on itemized deductions in general and casualty and theft losses in particular.
Additionally, you may be able to treat up to $20,000 as an ordinary loss not subject to the itemized deduction and casulaty loss rules.
Depending on which option(s) you choose, there may be an affirmative election that will be required with your tax return. It will be important that this election be completed and filed properly so that you do not lose any tax benefits that you are entitled to.
To ensure compliance with requirements imposed by the IRS, you are hereby informed that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
Perhaps someone will "work with you" to provide you a free answer to YOUR question - but I will not.
There is a method for taking down questions that you decide you do not want answered. As it is, you have wasted my time and effort.