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that petitioner has failed to produce any credible evidence to
substantiate his claimed loss, including the occurrence of any
casualty, or, if a casualty occurred, the amount deductible.
Section 165(a)1 allows as a deduction any loss sustained
during the taxable year and not compensated for by insurance or
otherwise. Section 165(c) limits the allowance of losses in the
cases of individuals. Section 165(c)(3) allows as a deduction to
an individual certain losses commonly referred to as casualty
losses. A casualty loss is allowable to an individual for a loss
of property not connected with a trade or business or with a
transaction entered into for profit, if the loss results from
1Sec. 165. Losses.
(a) General rule.--There shall be allowed as a
deduction any loss sustained during the taxable year and not
compensated for by insurance or otherwise.
* * * * * * *
(c) Limitation on losses of individuals.--In the case
of an individual, the deduction under subsection (a) shall
be limited to–-
(1) losses incurred in a trade or business;
(2) losses incurred in any transaction entered
into for profit, though not connected with a trade or
business; and
(3) except as provided in subsection (h), losses
of property not connected with a trade or business or a
transaction entered into for profit, if such losses
arise from fire, storm, shipwreck, or other casualty,
or from theft.
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Last modified: May 25, 2011