- 21 -
Commissioner, supra at 276; Huey v. Commissioner, T.C. Memo.
1985-348.
However, filing a proof of claim in a bankruptcy proceeding
has been held to be a ministerial act that does not require the
same degree of effort as pursuing a lawsuit. Jensen v.
Commissioner, supra.
The burden is on the taxpayer to show there was no
reasonable prospect of recovery in the year the theft loss is
claimed. Gale v. Commissioner, supra at 276.
For the reasons stated below, we hold that neither Mr.
Premji nor Mr. Norby sustained a deductible theft loss in 1990.
Both Mr. Premji and Mr. Norby contend that their theft
losses were discovered in 1990. To the contrary, respondent
contends that the losses were not discovered until 1991 when Ms.
Jobin, the trustee in bankruptcy, first ascertained that M&L was
operating an illegal ponzi scheme and that its inventory did not
exist. Regardless of the year in which the theft losses were
discovered, the crucial issue here, as we see it, is whether
petitioners had a reasonable prospect of recovery in 1990 when
they claimed the theft loss deductions. Based on the evidence
presented, we conclude that there was a reasonable prospect in
1990 that petitioners would subsequently recover some of their
losses.
Several facts support our conclusion. First, Ms. Jobin, the
trustee in bankruptcy, testified that she was "hopeful" in 1990
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