Wire fraud loss of cash by Schedule C taxpayer

[bsj224]

Can a self-employed travel agent (Sch C) deduct the loss of cash (received from client and thought to have been transferred to the foreign travel agent)  by wire fraud as a business expense on Sch C.  

[Terry53029]

Yes, but it should have been reported to police as a theft, so you have proof 

[bsj224]

Thank you - yes it was reported to the police  and investigated by federal authorities.  Unfortunately there was no insurance.

[BobKamman]

I'm not sure about Schedule C.  Casualty loss usually goes on Form 4684, then Form 4797 (or at least on the 1040 line for that).  It makes a difference, of course, in SE tax.  If Schedule C is the wrong place, and it makes a $5,000 tax difference, who pays the Section 6662 penalty?