- 33 - in a trade or business, or (2) incurred in a transaction entered into for profit, or (3) arise from a casualty or a theft. Sec. 165(c). Laney began to work on R.K. in 1977. He bought the Island in 1978, and applied for permits to develop the Island and make it accessible. The Army Corps of Engineers turned him down in 1979. Laney sued in the Court of Claims in 1980. The Court of Claims denied both sides’ summary judgment motions in 1981, and the case was returned to the trial division of the Court of Claims. Laney failed to make the principal payment on his purchase-money mortgage, and Poppe, the then holder of the mortgage note, foreclosed; the Florida court granted foreclosure in 1983. Later in 1983 the Laney Corporation filed a chapter 11 bankruptcy petition. In 1984 this was converted to a chapter 7 proceeding; then Laney trading as the Laney Proprietorship filed under chapter 7; then Laney was granted a discharge under chapter 7. A. Loss From Theft In order to be treated as a theft loss under section 165, the loss must arise from a criminal appropriation of the taxpayer’s property. Edwards v. Bromberg, 232 F.2d 107, 110 (5th Cir. 1956); Horn v. Commissioner, 90 T.C. 908, 940 (1988); Nichols v. Commissioner, 43 T.C. 842, 884 (1965). A seizure of property by a government under color of legal authority is not aPage: Previous 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Next
Last modified: May 25, 2011