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investment, Mr. Norby did not consult an attorney in 1990 or
1991. He knew that collateral suits against third parties were
in progress but chose not to participate in them. He did not
speak with Ms. Jobin, the bankruptcy trustee, in 1990. He filed
a proof of claim in the bankruptcy proceeding on November 5,
1991, seeking recovery of his losses.
While the information Mr. Norby obtained in 1990 indicated
M&L's fraud and raised questions about its true financial
condition, the record does not support his conclusion that,
objectively, his prospects of recovering at least part of his
investment were remote or nebulous.
Mr. Norby did not offer any explanation as to why any
attempt or suit for recovery would have been futile except to
relate that his analysis and subjective feelings led him to
believe that his principal investment in M&L had been lost in
1990. That is not sufficient to meet his burden of proof that
there was no prospect of recovery. See Boehm v. Commissioner,
326 U.S. at 294.
Accordingly, because we conclude that Mr. Premji and Mr.
Norby had reasonable prospects for recovery of some of their
claimed M&L losses in 1990, we hold that they are not entitled to
theft loss deductions in that year.11
11 Petitioners may be entitled to claim theft loss
deductions in the year their claims are allowable and paid in the
bankruptcy proceeding if their recoveries are less than the
principal amounts they invested in M&L.
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