Michael Rosen - Page 4

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          opportunity to dispute the tax liabilities relating to the years            
          in issue.  As a result, pursuant to section 6330(c)(2)(B), he may           
          challenge the underlying tax liability, and we review this matter           
          de novo.                                                                    
               Petitioner contends that respondent erred in disallowing the           
          $250,000 theft loss.  Petitioner further contends that respondent           
          erroneously proceeded with a collection action for the taxes,               
          penalties, and interest assessed in the notice of determination.            
          Conversely, respondent contends that petitioner failed to prove             
          that he sustained a theft loss and, thus, does not meet the                 
          statutory requirements of section 165(c)(3).  Respondent further            
          contends that proceeding with the collection action was                     
          appropriate.  We agree with respondent.                                     
               Petitioner must prove that he is statutorily entitled to the           
          theft deduction.2  New Colonial Ice Co. v. Helvering, 292 U.S.              
          435, 440 (1934).  Section 165(c)(3) allows a deduction for any              
          theft loss that is not compensated by insurance or otherwise.               
          Petitioner, however, failed to prove that a theft occurred, the             
          identity of the stolen property, his basis in the property, or              

               2  Generally, the Commissioner's determination is presumed             
          to be correct, and the taxpayer bears the burden of proving that            
          it is erroneous.  Rule 142(a); Welch v. Helvering, 290 U.S. 111,            
          115 (1933).  Sec. 7491(a)(1), which shifts the burden of proof to           
          respondent, is not applicable here because petitioner failed to             
          present credible evidence.                                                  

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