- 6 -
Discussion
The issue for decision is whether petitioners sustained
losses in 1995 from the expropriation of four parcels of
property. Section 165(a) provides for the deduction of losses
sustained during the taxable year for which no compensation is
received. In the case of individuals, section 165(c) limits the
deduction to losses incurred in a trade or business or in any
transaction entered into for profit.4 In order to be deductible,
a loss must be evidenced by a closed and completed transaction,
fixed by identifiable events, and actually sustained during the
taxable year. Boehm v. Commissioner, 326 U.S. 287, 291-292
(1945); sec. 1.165-1(b), Income Tax Regs. A loss is only
deductible for the taxable year in which such loss is sustained.
Sec. 1.165-1(d)(1), Income Tax Regs. The determination of
whether a loss occurred during a particular taxable year is
purely one of fact. Korn v. Commissioner, 524 F.2d 888, 890 (9th
Cir. 1975), affg. T.C. Memo. 1973-258. A critical inquiry is to
focus on the year that the taxpayer loses control over and
possession of the property at issue. United States v. S.S. White
Dental Mfg. Co., 274 U.S. 398 (1927).
In general a taxpayer bears the burden of proof. See Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). The burden
4 Expropriation losses are not casualty or theft losses for
purposes of sec. 165. Powers v. Commissioner, 36 T.C. 1191,
1192-1193 (1961).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011