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considered sustained by the taxpayer. Viehweg v. Commissioner,
90 T.C. 1248, 1255-1256 (1988); secs. 1.165-8(a)(2), 1.165-
1(d)(2)(ii), Income Tax Regs.
As used in section 165, the term “theft” is a word of
general and broad connotation, intended to cover any criminal
appropriation of another’s property, including theft by larceny,
embezzlement, obtaining money by false pretenses, and any other
form of guile. Bellis v. Commissioner, 61 T.C. 354, 357 (1973),
affd. 540 F.2d 448 (9th Cir. 1976); see sec. 1.165-8(d), Income
Tax Regs. Whether a loss from theft has occurred for purposes of
section 165 is determined under the laws of the State wherein the
loss allegedly was sustained. Bellis v. Commissioner, 540 F.2d
448, 449 (9th Cir. 1976), affg. 61 T.C. 354 (1973). However, a
Federal criminal statute may provide the requisite criminality
allowing a taking of a taxpayer’s property to be considered a
theft for purposes of section 165. E.g., Nichols v.
Commissioner, 43 T.C. 842, 884-885 (1965)(holding Federal mail
fraud to be a theft for purposes of section 165).
2. Estoppel Principles
a. Equitable Estoppel
“Equitable estoppel is a judicial doctrine that ‘precludes a
party from denying his own acts or representations which induced
another to act to his detriment.’” Hofstetter v. Commissioner,
98 T.C. 695, 700 (1992)(quoting Graff v. Commissioner, 74 T.C.
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