Joel Baker - Page 8

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          arrearages of $13,780 were paid.  Petitioner commenced legal                
          proceedings to contest the wage assignment.  On April 4, 1990,              
          petitioner obtained a judicial order declaring the wage                     
          assignment void, and requiring his former wife to return $7,180             
          which had been paid pursuant to the original order.  Petitioner             
          made attempts to find his former wife, but never filed suit                 
          seeking to collect the amounts she owed him.  On Schedule A of              
          his amended return for 1991, petitioner deducted $9,100 as a                
          theft loss attributable to amounts withheld from his paycheck               
          "for child support * * * not owing".5                                       
               Individual taxpayers may deduct certain losses, including              
          theft losses, sustained during the taxable year and not                     
          compensated by insurance or otherwise.  Sec. 165(a), (c)(3).  A             
          taxpayer may deduct a theft loss in the year in which the loss is           
          discovered, to the extent that the loss exceeds 10 percent of               
          adjusted gross income.  Sec. 165(e), (h)(2).  The existence of a            
          theft depends upon the law of the State where the purported theft           
          occurred.  Paine v. Commissioner, 63 T.C. 736, 740 (1975), affd.            
          without published opinion 523 F.2d 1053 (5th Cir. 1975).                    
          California provides that a person commits theft when he or she              
          "knowingly and designedly, by any false or fraudulent                       
          representation or pretense, defraud[s] any other person of                  
          money".  Cal. Penal Code sec. 484(a) (West 1988).                           


          5  Petitioner maintains that a total of $9,100 was withheld                 
          from his wages before payments finally ceased.                              



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