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computer system and possibly other personal property. Respondent
disallowed these claimed losses for lack of substantiation.6
At trial, petitioner husband produced photographs showing
personal computer equipment and other items of personal property
piled into the back of a pickup truck and lying along a roadside.
Petitioner husband contends that “the government came in with no
legal basis and just took everything and put it out on the side
of the road” because he had refused to turn over research that
the Government wanted. Petitioner husband’s contention, as best
we understand it, is that his personal computer was worth $1.5
million because of the value of technology that he had created
and installed on the computer.
Petitioners have failed to prove that a theft occurred.
Moreover, petitioners have neither established the fair market
value of the property alleged to have been stolen nor provided
sufficient evidence to allow the Court to estimate any of the
property’s value.7 See sec. 1.165-8(c), Income Tax Regs.
6 In the notice of deficiency, in showing his income tax
examination changes, respondent listed the disallowance of these
losses under “Adjustments to Income” as “Other Income”. The
accompanying explanation noted that these adjustments were in
disallowance of petitioners’ claimed losses of these amounts. In
their petition, petitioners attempt to recharacterize
respondent’s disallowance of these claimed losses as erroneous
determinations of unreported income and assign error on that
basis. Petitioners’ contentions are without merit.
7 Petitioners allege that a third party was prepared to pay
$1.5 million for this equipment, presumably before its alleged
(continued...)
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Last modified: March 27, 2008