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Petitioner contends that the estate is entitled to a theft
loss deduction for the amount of "excess fees" paid from the
estate's assets to Lynch and Reardon. To the contrary, respondent
contends that petitioner failed to prove that Lynch and Reardon
stole anything from the estate and has disallowed the claimed
theft loss deduction.
Petitioner bears the burden of proving that respondent's
determinations are incorrect. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933); Estate of Gilford v. Commissioner, 88
T.C. 38, 51 (1987). The general rule is that deductions are
strictly a matter of legislative grace, and a taxpayer has the
burden of establishing entitlement to any deduction claimed on
the return. New Colonial Ice Co. v. Helverinq, 292 U.S. 435, 440
(1934); Estate of Damon v. Commissioner, 49 T.C. 108, 118 (1967).
The value of decedent's taxable estate equals the value of
his or her gross estate less certain deductions. Sec. 2051.
Section 2054 allows a deduction from the value of the gross
estate for losses incurred during the settlement of the estate
arising from fires, storms, shipwrecks, or other casualties, or
from theft, when such losses are not compensated for by insurance
or otherwise.
In Estate of Shlensky v. Commissioner, T.C. Memo. 1977-148,
this Court stated, regarding section 2054:
While neither this section nor the applicable
regulations define the term "theft," the section's
language closely parallels section 165(c)(3), and under
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