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Income Tax Regs. The amount of the deductible loss is limited to
the lower of: (1) The fair market value of the property
immediately before the theft reduced by its fair market value
immediately after the theft (i.e., zero); or (2) its adjusted
basis, and if the property was used in a trade or business or for
the production of income and the fair market value of the
property immediately before the theft is less than its adjusted
basis, then its adjusted basis is treated as the amount of the
loss. See secs. 1.165-7(b)(1), 1.165-8(c), Income Tax Regs. And
with respect to property that is neither used in a trade or
business nor for the production of income, the amount of the loss
is limited to that portion of the loss that is in excess of $100.
See sec. 1.165-8(c), Income Tax Regs. Petitioner must establish,
inter alia, both the existence of a theft and the amount of the
claimed theft loss. See Elliott v. Commissioner, 40 T.C. 304,
311 (1963).
In his Form 4684, petitioner failed to identify specifically
the items of property that he alleges were stolen. Petitioner
also failed to establish the year that he discovered the theft.
He merely stated, in his Form 4684, that “Probably somethings
were stolen” when his storage shed was vandalized in 2001, and at
trial, he merely testified that “Somebody took” the 5,500 square
feet of marble he had stored. Finally, petitioner failed to
prove the amount of his loss by establishing the lower of the
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