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precluding the allowance of any casualty loss deduction with
respect to their house. See Zmuda v. Commissioner, 79 T.C. 714,
727-728 (1982), affd. 731 F.2d 1417 (9th Cir. 1984); Millsap v.
Commissioner, 46 T.C. 751, 760 (1966), affd. 387 F.2d 420 (8th
Cir. 1968).5
Petitioners contend that additional losses of an
indeterminate amount arose from an illegal foreclosure action in
2001, which they characterize as a theft. This Court has
previously questioned whether an illegal foreclosure action is a
theft for purposes of section 165(c). See Johnson v.
Commissioner, T.C. Memo. 2001-97. We need not decide this issue,
however, because petitioners have failed to show that the alleged
foreclosure action was illegal and have also failed to
substantiate the amount of the alleged losses. Accordingly, we
sustain respondent’s determination.
2. Claimed Loss of Computer Equipment
On their 2001 Federal income tax return, petitioners claimed
negative $36,000 as “Other gains or (losses).” On their 2002
Federal income tax return, petitioners claimed negative $1.5
million as “Other income.” Petitioners claim that these amounts
represent losses arising from the theft and destruction of a
5 Petitioner husband testified, without reference to any
supporting evidence, that petitioners paid $115,000 for the
property. Petitioners otherwise have offered no evidence to
establish the adjusted basis of their house.
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