- 18 - Petitioners have failed to prove that they were engaged in a trade or business involving “international transportation” as alleged on Schedules C of their Federal income tax returns for 1992. Petitioners have conceded that they were not in the trade or business of making loans. Consequently, they are not entitled to deduct the losses claimed on their respective Schedules C for 1992. Did Petitioners Incur Theft Losses Under Section 165(c)(2) or (3)? Subject to certain limitations, any loss sustained during the taxable year and not compensated for by insurance or otherwise is deductible. See sec. 165(a). In the case of individuals, the losses deductible under section 165(a) are limited to (1) losses incurred in a trade or business, see sec. 165(c)(1), (2) losses incurred in any transaction entered into for profit, see sec. 165(c)(2), and (3) with respect to property not connected with a trade or business or a transaction entered into for profit, a casualty or theft loss, see sec. 165(c)(3). As an alternate position, petitioners argue that if they are not allowed to deduct the losses claimed on their respective Schedules C attached to their 1992 returns because the losses were not incurred in a trade or business, they should be allowed to claim them as theft losses under section 165(c)(2) or (3).Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011