Searcy M. Ferguson, Jr., and Elizabeth L. Ferguson - Page 12

                                       - 12 -                                         
          divorce agreement,9 and, consequently, that the divorce                     
          agreement’s designation of the diamond ring as the separate                 
          property of Ms. Smith was ineffective.  Because Ms. Smith refused           
          to return the diamond ring to the corporation upon demand,                  
          petitioners contend that Ms. Smith embezzled the diamond ring and           
          that petitioners are entitled to a related section 165 theft loss           
          deduction in 2000.                                                          
               Section 165 generally provides for the deduction of certain            
          casualty losses, including losses from theft.10  For purposes of            

               9Petitioners rely on an alleged prior State court decision.            
          Although petitioners have provided this Court with no evidence as           
          to the alleged State court decision, we understand petitioners’             
          position to be that the court rejected a claim by the corporation           
          that Ms. Smith breached the divorce agreement with respect to               
          certain oil and gas properties on grounds that the corporation              
          was not a party to the divorce agreement.  Petitioners contend              
          that the State court decision that the corporation was not a                
          party to the divorce agreement terminated Ms. Smith’s right of              
          possession with respect to the ring.                                        
               10SEC. 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--                                                             
                         *    *    *    *    *    *    *                              
                    (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                    
                                                             (continued...)           





Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011