You can deduct a theft loss in the year you discover that your property was stolen. The taking of property must be illegal under state law to support a theft loss deduction. That property is missing is not sufficient evidence to sustain a theft deduction. It may have been lost or misplaced. So if all you can prove is that an article is missing or lost, your deduction may be disallowed. Sometimes, of course, the facts surrounding the disappearance of an article indicate that it is reasonable to assume that a theft took place. A deduction has been allowed for the theft of trees.
If you expect to be reimbursed by insurance, you must subtract the expected reimbursement when you figure your deductible loss (18.13).
A legal fee paid to recover stolen property has been held to be deductible as part of the theft loss. To figure the amount of a theft loss deduction, see 18.13.