Curtis G. Lockett and Edna L. Lockett - Page 8




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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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