Curtis G. Lockett and Edna L. Lockett - Page 5




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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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