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of a release." There is no objective evidence that petitioner
abandoned the claim with BMI during 1996. The record does not
support a finding that petitioners sustained an abandonment loss
during 1996. The Court sustains respondent on this issue.
With respect to petitioners' claim that the loss was a theft
loss, section 165(e) provides that any loss arising from theft is
treated as sustained during the taxable year in which the
taxpayer discovers the loss. See sec. 1.165-8(a)(2), Income Tax
Regs. Section 1.165-1(d)(3), Income Tax Regs., provides
generally that, if, in the year of discovery of the theft, there
is a reasonable prospect for recovery, the theft loss related
thereto is not considered sustained "until the taxable year in
which it can be ascertained with reasonable certainty whether or
not such reimbursement will be received." On this record, the
Court is satisfied that petitioners were reasonably certain,
prior to 1996, that they would not be reimbursed by BMI. The
record does not support petitioners' claim that they sustained a
theft during 1996. The record, moreover, does not satisfy the
Court that a theft occurred. However, if a theft did occur, the
Court is satisfied it did not occur during 1996. Respondent,
therefore, is sustained on this issue.
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Last modified: May 25, 2011