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of proving that the determination is improper. See Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). But see sec.
7491(a).
Section 165(a) allows a taxpayer to deduct any loss
sustained during the taxable year that is not compensated for by
insurance or otherwise. Section 165(c)(3), which limits losses
for individuals, allows an individual taxpayer to deduct losses
of property arising from, among other things, theft. The
existence of a theft must be determined by reference to the law
of the jurisdiction in which the loss occurred; however, a
criminal conviction is not necessary in order for a taxpayer to
demonstrate a theft loss. See Monteleone v. Commissioner, 34
T.C. 688, 692-694 (1960).
The New Mexico Criminal Code does not list “theft” as a
crime. See McCullough v. Commissioner, T.C. Memo. 1990-653 (“The
New Mexico Criminal Code does not specifically make ‘theft’ a
crime.”). Under New Mexico law, fraud, the crime Mr. Green
allegedly committed against petitioners, is “the intentional
misappropriation or taking of anything of value that belongs to
another by means of fraudulent conduct, practices or
representations.” N.M. Stat. Ann. sec. 30-16-6 (LexisNexis Supp.
2006). The elements of criminal fraud include “a specific intent
to cheat or deceive someone.” State v. Higgins, 762 P.2d 904,
908 (N.M. Ct. App. 1988). “Intent is seldom provable by direct
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Last modified: March 27, 2008