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for recovery if there is a bona fide claim for recoupment and a
substantial possibility that the claim will be decided in the
taxpayer’s favor. Ramsay Scarlett & Co. v. Commissioner, 61 T.C.
795, 811 (1974), affd. 521 F.2d 786 (4th Cir. 1975).
1. Claimed Destruction of Home and Illegal Foreclosure
Petitioners assign error to respondent’s disallowance of
$467,900 of casualty and theft losses that were included among
the $480,776 total itemized deductions that petitioners claimed
on their 2001 Federal income tax return.3 Petitioners contend
that the disputed $467,900 of casualty and theft losses arose, in
undifferentiated fashion, from the burning of their house in 1994
and from an illegal foreclosure action in 2001, apparently with
respect to the property where the destroyed house formerly stood.
Petitioners contend that although their house was destroyed in
1994, they claimed the casualty loss in 2001 because it was then
that litigation against an insurance company to recover the value
of the home proved unsuccessful.
The record is far from clear about the circumstances of the
alleged destruction of petitioners’ house and the litigation to
3 Petitioners have not otherwise assigned error to
respondent’s disallowance of the itemized deductions that they
claimed for 2001, 2002, and 2003, other than the $467,900 of
casualty and theft losses claimed on their 2001 Federal income
tax return. We deem petitioners to have conceded respondent’s
determinations with respect to all of their itemized deductions
other than the $467,900 item. In any event, petitioners have
failed to substantiate any of these itemized deductions.
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Last modified: March 27, 2008