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file and pay is due to reasonable cause and not willful neglect.
Higbee v. Commissioner, supra at 447. For reasons discussed
herein, we hold that respondent has met his burden of production
with respect to the section 6651(a)(1) addition to tax.
Characterization of Purported Losses
Petitioner argues that he is entitled to itemized deductions
for a loss sustained as a result of embezzlement of a brokerage
account he held with Kristian Capital Management and a loss
stemming from the termination of his employment at Wyeth-Aryst
Pharmaceutical.
Kristian Capital Management Brokerage Account
Section 165(g)(1) provides that a loss resulting from a
capital asset that becomes worthless during the taxable year
shall be treated as a loss from the sale or exchange of that
asset as of the last day of the taxable year. Petitioner claimed
that he sustained such a loss from the “embezzlement” of a
brokerage account he held with Kristian Capital Management.
To substantiate his claim, petitioner offered three
documents into evidence: A partial copy of a letter sent to him
from First American Discount Corporation, and two copies of Web
pages. The first letter showed that petitioner held a brokerage
account with Kristian Capital Management through the First
American Discount Corporation. The second document, a copy of a
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