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As in Nichols, at issue in Cummin were theft loss deductions
of individual investors, not of partnerships. Exclusively
analyzing a theft loss on the individual investor level, Cummin
never addresses the issue of a partnership level theft loss
deduction. We agree with respondent and find that Cummin simply
is not authority for petitioners’ proposition that “the
partnerships are entitled to a business theft loss.”
In their reply brief, petitioners claim that they cited
Cummin for the proposition that “the Tax Court has contemplated
there will be circumstances where a partner’s out-of-pocket loss
in a tax shelter is deductible as a theft loss.” This later
proposition adds nothing to petitioners’ arguments and is not
authority to allow a partnership level deduction where the
individual partners are swindled.
Finally, petitioners argue that both Girgis v. Commissioner,
T.C. Memo. 1987-556, and Harrell v. Commissioner, T.C. Memo.
1978-211, stand for the proposition that a partnership level loss
is incurred when money invested by a partner in a partnership is
taken by another partner. While both of these cases deal with
claims to partnership level losses, neither case stands for the
proposition set forth by petitioners. Further, the facts in both
of these cases are distinguishable from the facts in the instant
case because: (1) The theft by the partner in Girgis was an
embezzlement of partnership receipts and not of money invested by
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