A soldier cannot clear supply without accounting for his/her issued equipment.
They either turn it in, pay for it, or present documentation regarding it's disposition - survey, 15-6, or damage statement.
This was a 1LT that knew better. This is about paperwork, nothing more, and it's not even difficult paperwork.
A simple narrative stating the armor was destroyed through combat action, signed by the unit commander, would clear the debt.
Oh sh*t, I didn't even notice that he was a first lieutenant. Yeah, he DEFINITELY should have known better.