Humes Houston Hart - Page 10

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          were a "once only occurrence.  No stock market decline in history           
          * * * has been so sudden or extensive."  Whatever the historical            
          significance of Black Monday may be, petitioner must nevertheless           
          prove that this loss arose from a "casualty" within the meaning             
          of section 165(c)(3).  Petitioner has failed to do so.                      
               The loss sustained by petitioner resulted not from a                   
          casualty but from the sale of his stock to satisfy his margin               
          requirement.  This sale was not a casualty loss within the                  
          meaning of the statute, which generally contemplates some                   
          physical damage to the taxpayer's property.  See White v.                   
          Commissioner, 48 T.C. 430, 435 (1967); Citizens Bank of Weston v.           
          Commissioner, 28 T.C. 717, 720 (1957), affd. 252 F.2d 425 (4th              
          Cir. 1958).  We also note that losses which result from the mere            
          fluctuation in value are not deductible as casualty losses.  See,           
          e.g., Pulvers v. Commissioner, 407 F.2d 838 (9th Cir. 1969),                
          affg. 48 T.C. 245 (1967); sec. 1.165-4(a), Income Tax Regs.                 
               Alternatively, petitioner argues that the losses he                    
          sustained from meeting his margin call were the result of theft             
          perpetrated by Ferris & Co. or one of its agents.  Section 165(a)           
          allows a deduction for any loss "sustained" during the taxable              
          year and not compensated for by insurance or otherwise, including           
          losses arising from theft.  Sec. 165(c)(3).  Petitioner has the             
          burden of showing that a theft loss occurred.  Rule 142(a).  A              
          deduction for a theft loss can only be sustained if a theft                 
          occurred under the applicable State law.  Paine v. Commissioner,            

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