Andrew E. Blanche, Jr., and Cynthia D. Blanche - Page 25




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               For the year 1991, petitioners did not claim a casualty loss           
          on their return; however, in their petition they alleged                    
          entitlement to a casualty loss deduction of $19,000, subject to             
          limitations.  On brief, petitioners claimed this item to be                 
          $16,580.50 as allowed by the District Court.  The record contains           
          assertions by petitioners that the District Court award was                 
          discharged in bankruptcy by Mr. Hewitt; however, no evidence was            
          presented to show any such bankruptcy discharge of this debt or             
          the timing thereof.  Moreover, no evidence was presented to show            
          whether the proceeds from the foreclosure sale satisfied this               
          claim that primed the Federal tax lien.                                     
               Section 165(a) provides that there shall be allowed as a               
          deduction any loss sustained during the taxable year and not                
          compensated for by insurance or otherwise.  In particular,                  
          section 165(c)(3) allows a deduction to an individual for loss of           
          property not connected with a trade or business or a transaction            
          entered into for profit, if such loss arises from fire, storm,              
          shipwreck, or other casualty, or from theft.  Personal casualty             
          or theft losses are deductible only to the extent that the loss             
          exceeds $100 and 10 percent of adjusted gross income.  See sec.             
          165(h)(1) and (2).  Such losses, moreover, are deductible as                
          itemized deductions on Schedule A of the taxpayer's return.  In             
          this case, petitioners do not contend that the subject property             
          was ever used in a trade or business or a transaction entered               
          into for profit.                                                            






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