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authority, that respondent has the burden of proving by clear and
convincing evidence that the “public policy exception” applies to
deny the loss deduction for the cash that petitioner forfeited.
Petitioners rely vaguely on the “legislative design under sec.
162". Neither the statutory language of section 165 nor the
caselaw interpreting that section supports petitioners’
proposition. In any event, the issue in this case is essentially
legal, and the outcome does not depend on the burden of proof.
South Carolina had a sharply defined policy against illegal
gambling in 1999 as expressed in its statutes and enforced by the
GCSO. Petitioner acknowledged that the forfeiture was made
pursuant to the laws of South Carolina and pleaded guilty.
(Petitioner’s claim that his consent to the forfeiture was
“revoked” is uncorroborated and unpersuasive.) To allow
petitioners a deduction for a loss arising out of petitioner’s
illegal activities would undermine South Carolina’s policy by
permitting a portion of the forfeiture to be borne by the Federal
Government, thus taking the “sting” out of the forfeiture. See
Tank Truck Rentals, Inc. v. Commissioner, 356 U.S. 30, 35-36
(1958); Wood v. United States, supra at 422; Holt v.
Commissioner, supra at 81; Murillo v. Commissioner, supra; Mack
v. Commissioner, supra; Farris v. Commissioner, supra; Hopka v.
United States, supra at 482-483. In accordance with these
controlling precedents, petitioners are not entitled to a loss
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