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greater than the losses that petitioners reported for these
years, but for their theft/casualty deductions. Thus, it appears
that petitioners would have had tax liabilities for 1983, 1984,
and 1985 if respondent had disallowed the claimed theft/casualty
deductions. We do not know why respondent failed to audit
petitioners’ tax returns for these years. Respondent’s failure
to timely audit petitioners’ 1983, 1984, and 1985 tax returns may
have resulted in petitioners’ obtaining a windfall for those
years, but it does not estop respondent from auditing petitioners
for 1986, 1987, and 1988 on the theft/casualty loss deduction
carryover issue and determining deficiencies for these years on
this issue. Thomas v. Commissioner, 92 T.C. 206, 225-227 (1989),
and cases there cited.
We hold, for respondent, that Laney’s claimed 1983 loss did
not arise from theft.
B. Loss From Casualty
A loss must arise from fire, storm, shipwreck, or “other
casualty” in order to be treated as a casualty loss under section
165. Sec. 165(c)(3). Clearly, Laney’s R.K. loss did not arise
from a fire, a storm, or a shipwreck. Generally, in order for a
loss to arise from an “other casualty” (1) the event causing the
loss must be sudden, undesigned, violent or forceful, unexpected,
and accidental, and (2) the direct and proximate damage from the
event must cause a loss that is similar to losses arising from
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