1.26 Ark. Code R. 51-424(a)(1)
Losses sustained during the tax year, not compensated for by insurance or otherwise, are fully deductible. Losses must usually be evidenced by closed and completed transactions. The basis for determining the amount of the deduction for loss is the same as is provided in ACA 26-51411 for determining the gain or loss from the sale or other disposition of property. Proper adjustments must be made in each case for expenditures, receipts, losses or other items properly chargeable to the capital account and for depreciation, obsolescence, amortization or depletion. Moreover, the amount of the loss must be reduced by the amount of any insurance or other compensation received and by the salvage value, if any, of the property.
1.26 Ark. Code R. 51-424(a)(1)