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typically asked Mr. Stern to give him a portion of the escrowed
funds, and Mr. Stern promptly complied with those requests.
On or about March 23, 1990, Stanley R. Stern, P.C. merged
with another law firm (merger) and became known as Stern, Sherman
& Tamsen (the firm). Petitioner continued to work for the firm
under the same arrangement that he had had with Stanley R. Stern,
P.C., although his responsibilities were reduced.
At the time of the merger, the escrowed funds to which
petitioner was entitled equaled $173,000. On March 30, 1990,
petitioner asked Mr. Stern for those escrowed funds. Mr. Stern
did not comply with that request, and petitioner did not receive
the escrowed funds during 1990, or any other year, because those
funds were stolen by third parties.
During the year at issue, petitioner was a cash basis
taxpayer. He did not report the $173,000 of escrowed funds as
income in his 1990, or any other, Federal income tax return that
he filed, and he did not pay any Federal income tax on those
funds in 1990 or any other year.
OPINION
Petitioner has the burden of proving that he is entitled to
the deduction that he is claiming under section 165. See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Petitioner contends that he is entitled under section 165 to
deduct the $173,000 of escrowed funds that were stolen. Respon-
dent counters that petitioner did not receive those funds and did
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