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within the precise terms of the statute. New Colonial Ice Co. v.
Helvering, 292 U.S. 435, 440 (1934).
To be entitled to a deduction for a loss or a bad debt for
any taxable year, petitioners must establish that their
transaction fits within the parameters of section 165 or section
166. Section 165 allows a deduction for any loss sustained by a
taxpayer which is not compensated by insurance or otherwise. In
the case of individuals, this deduction is limited to losses
incurred in a trade or business, losses incurred in a for-profit
transaction, and casualty or theft losses. Sec. 165(a), (c).
The adjusted basis for the loss deduction is determined under
section 1011. A loss must be evidenced by closed and completed
transactions, fixed by identifiable events, and actually
sustained during the taxable year. Sec. 1.165-1(b), Income Tax
Regs.
The amount of loss allowable under section 165 shall not
exceed the taxpayer's basis in the asset. Fisher v.
Commissioner, T.C. Memo. 1986-141; sec. 1.165-1(c), Income Tax
Regs. The taxpayer bears the burden of proving the amount of the
taxpayer's basis in the asset. Millsap v. Commissioner, 46 T.C.
751, 760 (1966), affd. 387 F.2d 420 (8th Cir. 1968). A loss
cannot be computed where the taxpayer's basis in the property is
not proven. Fisher v. Commissioner, supra.
As mentioned, petitioners now concede that 1985 was not the
proper year to claim the $205,029 deduction. With respect to the
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