Hem C. and Krishna Gupta - Page 10




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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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