- 11 -
bankruptcy trustee’s final report indicates that the Vernon
property was not abandoned by the bankruptcy estate. As noted
above, the court approved an application filed by the bankruptcy
trustee to abandon remaining property, books, and records of the
bankruptcy estate in May of 2003. At that time, however, the
bankruptcy estate did not include the Vernon property, which was
the subject of the foreclosure by Herring National Bank in 2001.
Petitioners have failed to demonstrate that the bankruptcy estate
abandoned the Vernon property in 2000. Consequently, we hold
that petitioners are not entitled to deduct a loss in 2000 with
respect to the alleged abandonment.7
Alleged Theft or Embezzlement of the Diamond Ring by Ms. Smith
Respondent contends that petitioners are not entitled to a
theft loss deduction because Ms. Smith lawfully possessed the
diamond ring pursuant to the divorce agreement. Petitioners
contend that the corporation owned the diamond ring at all
relevant times,8 that the corporation was not a party to the
7Because we hold that petitioners failed to demonstrate that
the bankruptcy estate abandoned the Vernon property in 2000, we
need not decide whether such an abandonment would result in a
loss for Federal income tax purposes. See Benton v.
Commissioner, 122 T.C. 353, 368-369 (2004).
8Petitioners contend that the divorce agreement created a
bailment with respect to the diamond ring, and Ms. Smith held a
mere right to possession as the bailee.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011