M. Michael Stewart - Page 11

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          property.  People v. Ashley, 267 P.2d 271, 279 (Cal. 1954);                 
          People v. Fujita, 117 Cal. Rptr. 757, 764 (Ct. App. 1974); People           
          v. Conlon, 24 Cal. Rptr. 219, 222 (Dist. Ct. App. 1962).                    
               A theft loss requires a criminal appropriation of another’s            
          property.  Edwards v. Bomberg, supra at 110; Bellis v.                      
          Commissioner, 61 T.C. 354, 357 (1973), affd. 540 F.2d 448 (9th              
          Cir. 1976); Harcinske v. Commissioner, T.C. Memo. 1984-132.                 
               The record in this case is sparse as to the circumstances in           
          which petitioner wired Graves $60,000.  The record does reveal              
          that petitioner was given a note; thus it appears that petitioner           
          initially believed that the transaction was designed as a loan.             
          We have no information as to what Grave’s intentions were with              
          respect to the funds.  There is nothing in this record indicating           
          that any civil or criminal action was taken against Graves upon             
          his failure to either invest or return the funds.  Whether a                
          theft occurred, it is unclear whether the theft occurred at the             
          time the funds were wired to Graves, or at some later time.  More           
          importantly, if there was a theft, the record is unclear as to              
          when petitioner discovered the theft and whether she pursued a              
          claim for reimbursement.                                                    
               As indicated, for purposes of section 165(a), a loss arising           
          from theft is treated as sustained during the taxable year in               
          which the taxpayer discovers such loss.  Sec. 165(e); sec. 1.165-           
          8, Income Tax Regs.; see Lolli v. Commissioner, T.C. Memo. 1996-            






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