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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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