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Mr. Norby sustained a loss in connection with his placement
of funds with M&L.
In the notice of deficiency dated March 15, 1994, respondent
disallowed Mr. Norby's claimed theft loss of $60,000 on the
ground that no deductible loss was sustained in 1990.
OPINION
1. Claimed Theft Loss Deductions in 1990
The parties agree that Mr. Premji and Mr. Norby sustained
theft losses.8 Sec. 165(a) and (e). They also agree that Mr.
Premji and Mr. Norby incurred losses in transactions entered into
for profit. Hence, section 165(c)(2) controls the reporting of
their theft losses. The dispute is whether deductible theft
losses were sustained in 1990.
Petitioners have the burden of proving that they are
entitled to the deductions claimed. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933). This includes the burden of
proving that a deductible loss occurred in the year claimed. See
Burnet v. Houston, 283 U.S. 223, 227 (1931); Citron v.
Commissioner, 97 T.C. 200, 207 (1991).
The appropriate year for a loss deduction is the year in
which the loss is sustained. Sec. 165(a); sec. l.165-1(d)(1),
8 See Muncie v. Commissioner, 18 T.C. 849,851 (1952)
(whether a theft occurred depends on the law of the jurisdiction
where the loss was sustained); see also Edwards v. Bromberg, 232
F.2d 107 (5th Cir. 1956). The applicable provisions of the
Colorado theft statute are sections 18-4-401 and 18-4-403, Colo.
Rev. Stat. (1986 and 1995 Supp.).
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