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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7197
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I bought and paid PCs that were supposed to be

Customer Question

I bought and paid for 4 PCs that were supposed to be for a company I was working for that turned out to be a fraud. I gave the PCs to the company, but never got reimbursed. How can I best claim that loss?
As a follow up - can I claim all the hours that I spent "working" for this company that I never got paid for?
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.
Tell me more about what went on here.You can't get any credit for work you never got paid for.What happened to the computers?What happened to the Company & the owners? Are they around.What efforts did you make to obtain either the reimbursement or the computers in an attempt to mitigate your loss?
Customer: replied 1 year ago.
I shipped the computers to the address that was provided. They provided me a bank account to withdraw the funds, but a few weeks later that reimbursement amount was pulled back from my bank account. It turned out that I was working for a fraudulent company that "employed" me as a scam. I filed a police report and contact a federal bureau to investigate, but will likely never recover the PCs or the money I spent on them.
Customer: replied 1 year ago.
In addition, under the terms of the employee agreement which I signed, I was supposed to be receiving an hourly wage for the other tasks they had me work on. However, they never paid me for my work.
Expert:  Stephen G. replied 1 year ago.
Well, if you itemize deductions, based upon the facts and circumstances as you describe them, you can definitely claim the cost of the computers as a "Casualty or Theft Loss" on Form 1040, Schedule A for the year that you discovered the loss.Unfortunately, there is no tax deduction for the time you worked for the company and didn't get paid.
Customer: replied 1 year ago.
Can I claim the purchase of the PCs as a job related expense?
Expert:  Stephen G. replied 1 year ago.
No, I don't believe so as you didn't really have a job that generated any earnings. Even if you did it would still be an itemized deduction but it wouldn't be subject to the 10% AGI floor.If you were to take the position that you were an Independent Contractor, and claim the purchase of the computers as a business expense, you wouldn't be able to write the costs off under IRC 179 unless you have other income as IRC 179 deductions can't move a business into a loss position.Do you have a business that generates revenue where you act as a Independent Contractor?
Expert:  Stephen G. replied 1 year ago.
Just checking in..................I see that you've had a chance to read my response, do you have any follow-up questions?If not, please remember to rate my response as that is the only way we receive credit for our share of any payment that you have already made.Thanks very much,Steve G.
Expert:  Stephen G. replied 1 year ago.
Just checking in..................I see that you've had a chance to read my response, do you have any follow-up questions?If not, please remember to rate my response as that is the only way we receive credit for our share of any payment that you have already made.Thanks very much,Steve G.