Terry Nathan Norman - Page 10

                                        - 9 -                                         
               Section 165(a) allows a deduction for “any loss sustained              
          during the taxable year and not compensated for by insurance or             
          otherwise.”  Concerning theft losses, section 165(a) is                     
          applicable for the year “in which the taxpayer discovers such               
          loss.”  Sec. 165(e).  For purposes of section 165(e), theft                 
          includes embezzlement.  Sec. 1.165-8(d), Income Tax Regs.  If in            
          the year of discovery there is a claim for reimbursement that has           
          a reasonable prospect for recovery, a loss is not considered                
          sustained until the tax year in which it can be ascertained with            
          reasonable certainty.  Secs. 1.165-1(d)(3), 1.165-8(a)(2), Income           
          Tax Regs.                                                                   
               Petitioner bears the burden of proving a deductible loss,              
          and he must establish the extent and amount of the loss.  Citron            
          v. Commissioner, 97 T.C. 200, 207 (1991).  We apply the law of              
          the jurisdiction where the loss was sustained to determine                  
          whether a theft or embezzlement has occurred.  Bellis v.                    
          Commissioner, 540 F.2d 448, 449 (9th Cir. 1976), affg. 61 T.C.              
          354 (1973); Luman v. Commissioner, 79 T.C. 846, 860 (1982).                 
               It is unclear where petitioner resided in 2002.  As a                  
          result, it is also unclear where petitioner may have sustained              
          his claimed theft loss.  The record indicates that petitioner               
          formerly resided in Illinois and currently resides in California.           
          We set forth each State’s theft statute.                                    







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