- 18 -
Income Tax Regs. A theft loss is sustained during the taxable
year in which the taxpayer discovers the loss. Sec. 165(e); Sec.
1.165-1(d)(3), 1.165-8(a)(2), Income Tax Regs. The loss is not
deductible for the year in which the theft actually occurs unless
that is also the year in which the taxpayer discovers the loss.
Sec. 1.165-8(a)(2), Income Tax Regs.; see Alison v. United
States, 344 U.S. 167, 170 (1952); Marine v. Commissioner, 92 T.C.
958, 976 (1989), affd. without published opinion 921 F.2d 280
(9th Cir. 1991); Ramsay Scarlett & Co. v. Commissioner, 61 T.C.
795, 808 (1974), affd. 521 F.2d 786 (4th Cir. 1975).
However, if in the year the taxpayer discovers the loss
there is a claim for reimbursement for which there is a
reasonable prospect of recovery, "no portion of the loss with
respect to which reimbursement may be received is sustained, for
purposes of section 165, until the taxable year in which it can
be ascertained with reasonable certainty whether or not such
reimbursement will be received". Sec. 1.165-1(d)(3), Income Tax
Regs.
It is clear that the loss must be actual and sustained in
fact. Boehm v. Commissioner, 326 U.S. 287, 291-292 (1945);
Ismert-Hincke Milling Co. v. United States, 246 F.2d 754, 757
(10th Cir. 1957); Lapin v. Commissioner, T.C. Memo. 1990-343,
affd. without published opinion 956 F.2d 1167 (9th Cir. 1992);
sec. 1.165-1(b), Income Tax Regs.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011