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from Richard Kellogg for $3,000. Sometime thereafter, Alice Faye
Lotts, who cohabited with Mr. Brown until early December 1993,
filed for a change of title, making it appear as if she purchased
the vehicle from Mr. Kellogg. On or about December 9, 1993, Ms.
Lotts filed a complaint with the police department alleging that
the vehicle had been stolen. Mr. Brown was arrested as a result
of the complaint, and the vehicle was turned over to Ms. Lotts.
On or about December 14, 1993, Ms. Lotts, after having moved out
of Mr. Brown’s residence, returned to the residence and removed
several items of personal property belonging to Mr. Brown. Mr.
Brown valued these items (including the vehicle) at $22,300 and
deducted this amount as a theft loss on his 1993 Federal income
tax return.
On July 29, 1994, Mr. Brown filed a civil lawsuit against
Ms. Lotts seeking the return of his property. Mr. Brown secured
a default judgment against Ms. Lotts on November 14, 1994. Mr.
Brown has made efforts to collect on the judgment, including
filing for a writ of execution in February 1995, and he is still
attempting to recover the property. Mr. Brown did manage to
recover the vehicle in 1995, and he reported $3,000 in income on
his 1995 Federal income tax return as a result of the recovery.
Mr. Brown reported a net profit of $41,600 on Schedule C
(Profit or Loss from Business) of his 1993 Federal income tax
return from his business as a wholesale distributor of audio
equipment. He did not file a Schedule SE or pay self-employment
tax.
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Last modified: May 25, 2011