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find that petitioner has failed to carry his burden of establish-
ing that he discovered the alleged custom house theft loss in
October 2000 or at any other time in that year.
Assuming arguendo that petitioner had carried his burden of
establishing that he discovered the alleged custom house theft
loss in 2000, we turn to whether petitioner established the
amount of the alleged custom house theft loss which he claims he
is entitled to deduct under section 165. As discussed above, the
amount of a loss that a taxpayer is entitled to deduct under
section 165 is the lesser of (1) the difference between the fair
market value of the property before the loss and the fair market
value of the property after the loss, the latter value in the
case of loss by theft being zero, or (2) the adjusted basis
provided in section 1011 for determining the loss from the sale
or other disposition of the property which was the subject of the
loss. Sec. 165(b); secs. 1.165-7(b)(1), 1.165-8(c), Income Tax
Regs.
With respect to the fair market value of the custom house
before the alleged custom house theft, petitioner introduced an
appraisal report prepared by Robert H. Campbell & Associates,
LLC, that was dated October 28, 2002 (October 28, 2002 appraisal
report) and that was prepared and provided to petitioner in
connection with the custom house litigation counterclaim. That
appraisal report did not purport to establish the fair market
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