Douglas Michael Riley - Page 4

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          1.  Casualty Loss Deductions                                                
               Petitioner asserts that as a result of his then-wife’s                 
          decision to terminate her pregnancy in 1974 or 1975, petitioner             
          suffered a “theft/casualty” loss of a “nonviable fetus”.  In                
          response to this loss, petitioner claims entitlement to casualty            
          loss deductions for each of the years 1992 through 1995 of                  
          $50,729, $58,056, $4,704, and $13,899, respectively.  These                 
          losses roughly correspond to the amount of gross income reported            
          for each year.                                                              
               Section 165(a) allows a deduction for losses sustained                 
          during the taxable year which are not compensated for by                    
          insurance or otherwise.  Under section 165(c), however, an                  
          individual may deduct a loss not connected with a trade or                  
          business or with a transaction entered into for profit if the               
          loss arose from “fire, storm, shipwreck, or other casualty, or              
          from theft.”  Sec. 165(c)(3).  Casualty losses under section 165            
          must be deducted for the taxable year in which the loss was                 
          sustained.  See sec. 1.165-7(a)(1), Income Tax Regs.  Losses due            
          to theft may be deducted during the taxable year in which the               
          taxpayer discovered the loss.  See sec. 165(e).                             

          casualty loss resulted when his then wife elected to terminate              
          her pregnancy in August 1974.                                               

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