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Petitioner estimated that the approximate value of the lost
luggage was $530.3
Section 165(a) allows a taxpayer to deduct losses sustained
during the taxable year which were not otherwise compensated. In
the case of an individual taxpayer, the section 165(a) deduction
is limited to: (1) Losses incurred in a trade or business; (2)
losses incurred in any transaction entered into for profit; and
(3) losses arising from fire, storm, shipwreck, other casualty,
or from theft. See sec. 165(c). The amount of the deduction for
any loss cannot exceed the adjusted basis of the property, as
provided in section 1011. See sec. 165(b). To be entitled to a
deduction under section 165(a), a taxpayer is required to
substantiate the deduction through the maintenance of books and
records or other sufficient evidence. See sec. 1.6001-1, Income
Tax Regs.
Petitioner provided the Court with three receipts: (1) A
receipt for a green piece of luggage, model number 244, dated
December 23, 1993, in the amount of $242.44; (2) a receipt for a
green piece of luggage, model number 228, dated April 6, 1994, in
the amount of $341.06; and (3) a receipt for a black leather
garment bag, dated April 27, 1994, in the amount of $210.90.
3
It is unclear from the record how petitioner calculated
this deduction. It is apparently based on the initial cost of
the luggage which petitioner claimed was stolen. Additionally,
petitioner apparently did not claim a Schedule C deduction for
the loss of the contents of the luggage.
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