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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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