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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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