Rudolph H. Beaver - Page 6

          individual such as petitioner, however, losses are deductible               
          only to the extent that they (1) were incurred in a trade or                
          business, (2) were incurred in a transaction entered into for               
          profit, or (3) arose from a casualty or a theft.  Sec. 165(c)(3).           
          For this purpose, the amount of a theft loss deduction generally            
          equals the lesser of (1) the reduction in the property’s fair               
          market value from the time immediately before the theft until the           
          time immediately after the theft, or (2) the property’s cost or             
          other basis.  See sec. 1.165-7(b)(1), Income Tax Regs.; see also            
          sec. 1.1011-1, Income Tax Regs.  Whereas a loss in general is               
          deductible in the year in which it is sustained, sec. 165(a), a             
          loss from a theft is deductible in the year in which it is                  
          discovered, sec. 165(e).                                                    
               The parties dispute primarily whether the brokers’                     
          activities amounted to a “theft” committed against petitioner               
          under applicable law, which the parties agree is the law of New             
          York.  We need not decide this dispute.  Even assuming arguendo             
          that petitioner’s loss was attributable to a theft that was                 
          discovered in 1997, he would still not prevail because he has               
          failed to establish that he had any basis in HPI stock that he              
          could deduct as a theft loss for 1997.                                      
               Petitioner claimed for 1993 a capital loss of $2,816,540               
          from the sale of HPI stock and reported for 1997 that he had a              
          $460,486 capital loss carryover as of the beginning of that year.           

Page:  Previous  1  2  3  4  5  6  7  8  9  Next

Last modified: May 25, 2011