Is there any way a taxpayer can deduct two classic cars stolen from him if he is not in that business?

[rcarmarkcpa]

Taxpayer owned two classic cars that were stolen from him held as an Investment. They were worth close to $ 300 K each. He is not in the trade or business of classic cars or it would be hard to sustain that argument. Under the TCJA there is no deduction for theft and casualty losses not in a Federal Disaster Area. Is there anything that this taxpayer can do to obtain a deduction ?

                                                                                                                                                         Thanks

[IRonMaN]

A $600K investment and he didn't have any insurance? 

[rcarmarkcpa]

No insurance as unbelievable as that may seem . 

[CMcCullough]

Maybe the state still allows a theft deduction.  California does.  Will be curious what others say on Federal.  

[Taxtime3]

Limitation on personal casualty and theft losses. Personal casualty and theft losses of an individual, sustained in a tax year beginning after 2017, are deductible only to the extent that the losses are attributable to a federally declared disaster. Personal casualty and theft losses attributable to a federally declared disaster are subject to the $100 per casualty and 10% of your adjusted gross income (AGI) reductions unless they are attributable to a qualified disaster loss. Personal casualty and theft losses attributable to a qualified disaster loss are not subject to the 10% of the AGI reduction and the $100 reduction is increased to $500. An exception to the rule above, limiting the personal casualty and theft loss deduction to losses attributable to a federally declared disaster, applies if you have personal casualty gains for the tax year.

[BobKamman]

I can't resist.  Were they both stolen at the same time?  Or did he figure the first time it happened, it would never happen again?

And what was his basis?  I had a client with a classic car (from the late 60s) that he had bought used off the lot, when it was a year old, for something like $2,500.  He sold it a few years ago for a seven-figure amount.  He took part of the payment in a Section 1031 exchange, back when you could do that with used cars.  Maybe you still can.  Anyway, he insisted it was insured, but the premiums were something like $25 a year.  I think I helped convince him that there was too much risk in keeping it.  

[rcarmarkcpa]

Both were stolen at the same time. Why there was no insurance is beyond comprehension. The taxpayer had a lot going on in his life at the time both business wise and health wise and was out of town.. The taxpayer bought them at about $ 50,000 each. He says that he got an unbelievable deal when another older and rich friend wanted to sell them to another car guy who would appreciate them.  

              My question is basically if there is any way this could be considered an investment and thus a capital loss. He has an enormous capital gain this year on a real estate sale and would like to offset partially.  I don't think that it would work, but I told him that I would research.

                                                                                                                                                        Thanks

[Taxes-by-Rocky]

Assuming you've 'gone down the road' (done the research on) possibly treating them as 'collectibles,' albeit you may be lacking in sale or exchange treatment?  Their recovery and disposal, even in poor condition, might get you the latter.

[Taxtime3]

What was his intent when he bought them?

 https://www.thetaxadviser.com/issues/2019/nov/taxation-collectibles.html