- 15 -
The fourth issue is whether petitioner is entitled to a
trade or business loss deduction for 1996 for the medical
equipment that was stolen from her rental vehicle. Section
165(a) allows as a deduction any loss sustained by a taxpayer
during the taxable year that is not compensated for by insurance
or otherwise. Theft losses to individuals are allowable as a
deduction under section 165(c). Theft losses are treated as
having been sustained during the taxable year in which the
taxpayer discovers the loss. Sec. 165(e). In any taxable year,
personal casualty losses are generally allowed only to the extent
the losses from each casualty exceed $100 and exceed 10 percent
of the adjusted gross income of the individual. Sec. 165(c)(3),
(h)(2). However, section 165(h)(2) does not apply here because
the Court is satisfied that the claimed loss arose in connection
with petitioner’s trade or business.
The proper measure of a casualty loss is the difference
between the fair market value of the property before the casualty
and its fair market value immediately after the casualty but not
exceeding its adjusted basis. Helvering v. Owens, 305 U.S. 468,
471 (1939); Millsap v. Commissioner, 46 T.C. 751, 759 (1966);
secs. 1.165-7(b)(1), 1.165-8(c), Income Tax Regs. Where the
casualty loss is the result of theft, the fair market value of
the property immediately after the theft is zero. Sec. 1.165-
8(e), Income Tax Regs. The Court is satisfied from the record
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NextLast modified: May 25, 2011