Edward C. Tietig - Page 39




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          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.                                                                





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