- 39 -
petitioner no longer had any reasonable prospect of recovering
the remainder of the theft loss.
Petitioner reported the loss on his 1993 Federal income tax
return. Petitioner claimed on Form 4684, Casualties and Thefts,
that the cost or basis of the property stolen was $38,822.
B. Discussion
Section 165(a) allows as a deduction “any loss sustained
during the taxable year and not compensated for by insurance or
otherwise”.43 In general, the amount of the deduction equals
the adjusted basis of the property involved. Sec. 165(b).
Petitioner has the burden of proving the adjusted basis of the
property. See Rule 142(a).
Petitioner asserts the proper loss amount is $19,995, while
respondent asserts the proper amount of the loss is $20,149
before the limitation imposed by section 165(h)(2).44
In determining the amount of petitioner’s deduction,
respondent accepted petitioner’s representations as to the cost
or fair market value of all artwork reported stolen and adjusted
the business property reported stolen for depreciation.
43The parties agree that the theft loss was deductible in
1993, not 1991 as originally determined by respondent.
44Sec. 165(h)(2) provides that losses from property used for
personal purposes are allowed for a taxable year only to the
extent that they exceed 10 percent of the adjusted gross income
of the individual. In the present case, petitioner’s 1993
adjusted gross income will be determined in a Rule 155
computation.
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011