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brother. Petitioner argues that he is entitled to an abandonment
loss deduction for his interest in Stockton/Elsie property for
1995 in the amount of $390,867.
Section 165(a) allows a deduction for any uncompensated loss
sustained during the taxable year. This loss must be incurred in
a trade or business, in any transaction entered into for profit,
or in a casualty or theft. Sec. 165(c). The amount of the loss
is the adjusted basis of the property. Sec. 165(b).
To be entitled to an abandonment loss under section 165, a
taxpayer must show: (1) An intention on the part of the owner to
abandon the asset, and (2) an affirmative act of abandonment.
Citron v. Commissioner, 97 T.C. 200, 208 (1991). An affirmative
act of abandonment must be ascertained from all the facts and
circumstances, United Cal. Bank v. Commissioner, 41 T.C. 437, 451
(1963), affd. per curiam 340 F.2d 320 (9th Cir. 1965), and "the
Tax Court [is] entitled to look beyond the taxpayer's formal
characterization”, Laport v. Commissioner, 671 F.2d 1028, 1032
(7th Cir. 1982), affg. T.C. Memo. 1980-355. The loss is allowed
for the year in which the act of abandonment takes place. See
Buda v. Commissioner, T.C. Memo. 1999-132; sec. 1.165-1(d)(1),
Income Tax Regs.
Petitioner transferred the property to Angelo by deed.
Under California law, a deed need not be recorded when delivered
to be effective. Douglas v. Commissioner, T.C. Memo. 1989-592.
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