Pepi Schafler, f.k.a. Pepi Summer - Page 4

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          Discussion                                                                  
               We begin by noting that petitioner bears the burden of                 
          proving that respondent's determination is erroneous.  Rule                 
          142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).  Moreover,            
          deductions are a matter of legislative grace, and petitioner                
          bears the burden of proving that she is entitled to any                     
          deductions claimed.  INDOPCO, Inc. v. Commissioner, 503 U.S. 79,            
          84 (1992).                                                                  
               1.  Theft Loss                                                         
               Petitioner traveled to Florida for several weeks from                  
          December 1992 through January 1993.  Included in her belongings             
          were several pieces of jewelry.  In early January 1993,                     
          petitioner noticed that some of her jewelry was missing.  On                
          Schedule A of her 1992 return, petitioner claimed a theft loss in           
          the amount of $8,660, which respondent reduced by computational             
          adjustment to $5,414.  Upon examination, respondent disallowed              
          the entire theft loss claimed by petitioner.  Petitioner argues             
          that she is entitled to a deduction with respect to the theft               
          loss in the amount of $8,660.                                               
               Individual taxpayers may deduct losses arising from fire,              
          storm, shipwreck, or other casualty, or from theft, if the loss             
          is sustained during the taxable year and not compensated by                 
          insurance or otherwise.  Sec. 165(a), (c)(3).  Personal casualty            
          or theft losses are deductible to the extent that the losses, as            





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