- 5 - A: That's really a matter of when we had this discussion once before. The minute I handed him money it was a swindle. The last time -- the last check he got in my heart, in my opinion, was the swindle. Q: Right A: Now, when did I know that, probably a week later. Q: Which was in January of 1989? A: Or December of '88 in that little time frame, yeah. Section 165(a) generally provides that there shall be allowed as a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise. For purposes of section 165(a), a loss arising from theft is treated as sustained during the taxable year in which the taxpayer discovers such loss.3 Sec. 165(e); sec. 1.165-8, Income Tax Regs. Thus, even if we accept, arguendo, that there was a theft of the moneys invested by petitioner, his testimony belies his claim that the proper year to account for such a loss was 1990.4 Respondent bears the burden of proof with respect to her determination of an increased deficiency in the amount of $487 3The record does not demonstrate, with respect to the purported theft of his investment, that there was a claim for which petitioner had a "reasonable prospect of recovery". Accordingly, the provisions of sec. 1.165-1(d)(3), Income Tax Regs., are not applicable in this matter. 4Furthermore, even if we were to characterize the "business loss" claimed in the amended petition as a deduction for a bad debt, petitioner has failed to produce any evidence, other than his own self-serving testimony, that such a debt became worthless within the taxable year 1990. Sec. 166(a).Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011