Rudolph H. Beaver - Page 7

          We conclude from this representation that petitioner has utilized           
          as of January 1, 1997, all of the capital loss that he claimed in           
          1993, but for, at the most, $460,486.  As to the $460,486, the              
          record does not indicate the source of that amount.  The record             
          does not contain, for example, any of petitioner’s tax returns              
          from 1993 to 1996 or any credible evidence as to the gains or               
          losses from petitioner’s capital transactions in years before               
          1997.  Whereas the $460,486 could possibly stem from the capital            
          loss on HPI stock that petitioner claimed in 1993, it could just            
          as easily be a carryover from a capital loss sustained in 1994,             
          1995, or 1996.                                                              
               A loss from the sale or other disposition of property cannot           
          exceed the taxpayer’s basis in the property, sec. 1.165-1(c),               
          Income Tax Regs., and a taxpayer such as petitioner who cannot              
          prove his basis in his property cannot compute a theft loss                 
          deduction, see Millsap v. Commissioner, 46 T.C. 751, 760 (1966),            
          affd. 387 F.2d 420 (8th Cir. 1968); Towers v. Commissioner,                 
          24 T.C. 199, 239 (1955), affd. on other grounds sub nom. Bonney             
          v. Commissioner, 247 F.2d 237 (2d Cir. 1957); Heckett v.                    
          Commissioner, 8 T.C. 841 (1947).  We believe that this burden               
          requires that petitioner prove that he did not recognize in one             
          or more years before 1997 as a capital loss what he now claims as           
          a theft loss.  Cf. Associated Dentists v. Commissioner, T.C.                
          Memo. 1998-287 (citing, among other cases, United States v.                 

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