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Respondent asserts that petitioners have failed to prove that the
requirements for a theft loss have been met. We agree.
In order for a deduction to be allowed under section 165(a),
the loss “must be evidenced by closed and completed transactions,
fixed by identifiable events, and, except as otherwise provided
in section 165(h) and �1.165-11, relating to disaster losses,
actually sustained during the taxable year.” Sec. 1.165-1(b),
Income Tax Regs. For purposes of section 165(a), a loss arising
from theft is sustained during the taxable year in which the
taxpayer discovers the loss. See sec. 165(e); sec. 1.165-
8(a)(2), Income Tax Regs. The term theft includes, but is not
limited to, larceny, embezzlement, and robbery. See sec. 1.165-
8(d), Income Tax Regs. Whether a theft within the meaning of
section 165 has occurred “depends upon the law of the
jurisdiction wherein the particular loss occurred.” Monteleone
v. Commissioner, 34 T.C. 688, 692 (1960).
Petitioners urge us to find that a theft occurred based
primarily on the fact that they did not recover the funds which
were transferred to Quotum’s bank account in January 1992. They
claim that they were defrauded since the funds advanced have
vanished, and they never acquired any Russian airplanes.
Petitioners bear the burden of proving that a theft has occurred
and that the requirements of section 165 have been met. See Rule
142(a); Allen v. Commissioner, 16 T.C. 163, 166 (1951). In order
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