Jenny v. Commissioner

1977 T.C. Memo. 142, 36 T.C.M. 607, 1977 Tax Ct. Memo LEXIS 296

• Court: United States Tax Court
• Decided: May 12, 1977
• Docket: Docket No. 7703-75.
• Status: Unpublished

Opinion

HENRY JENNY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Jenny v. Commissioner

Docket No. 7703-75.

United States Tax Court

T.C. Memo 1977-142; 1977 Tax Ct. Memo LEXIS 296; 36 T.C.M. (CCH) 607; T.C.M. (RIA) 770142;

May 12, 1977, Filed

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Michael Antin, for the petitioner.

Marion Westen, for the respondent.

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WILBUR

MEMORANDUM FINDINGS OF FACT AND OPINION

WILBUR, Judge: Respondent determined a deficiency in petitioner's Federal income tax in the amount of $4,208 for the taxable year 1972. The sole issue remaining for our determination is the amount of unreimbursed theft loss which petitioner is entitled to deduct under section 165. ¹

FINDINGS OF FACT

Some of the facts have been stipulated and are found accordingly.

Petitioner, Henry Jenny (Jenny), resided in Palm Springs, California at the time the petition was filed in this case.Petitioner filed a Federal income tax return for the taxable year 1972 with the Office of the Internal Revenue Service at Ogden, Utah.

On December 1, 1972, Jenny returned from a short trip to Los Angeles to find that, in his absence, someone had robbed his home of several valuable items. Jenny alerted the police who filed a report describing the robbery and listing 16 items which were stolen. Fifteen of these items were valued at $7,295 with the value of a sixteenth item, "miscellaneous clothing," listed as unknown.

Jenny's property was insured against theft with the State Farm Fire and Casualty Company (State Farm). A proof of loss claim dated December 27, 1972 valued the stolen items at $10,015, and an itemized list of stolen property, submitted to State Farm on Jenny's stationary lists four items in addition to all the items previously given on the police report. State Farm paid Jenny the maximum amount under the policy, $4,200 in early 1973.

On Schedule A of his 1972 Federal income tax return, Jenny claimed a $7,295 casualty loss but did not indicate whether or not he had received any insurance reimbursement.

OPINION

Respondent concedes that petitioner sustained a loss during 1972 due to theft. Petitioner concedes that he received $4,200 from State Farm reimbursing him for at least part of that loss. What the parties dispute is the value and basis of the stolen property for purposes of determining the theft loss under section 165.

Section 165(c)(3) permits individuals to deduct losses caused by the theft of nonbusiness property only to the extent that the loss from each theft exceeds $100 and is not reimbursed by insurance or otherwise. The proper measure of the loss sustained is the lesser of (1) the fair market value of the property immediately before the theft or (2) the adjusted basis of the property. Sections 1.165-7 and 1.165-8, Income Tax Regs.Ternovsky v. Commissioner, 66 T.C. 695, 697-98 (1976). The basis of Jenny's property for this purpose is the cost of such property. Section 1012.

We have been presented with three sets of figures concerning the value of the stolen property. Jenny gave the police department a tentative property list on the day he discovered the theft. A little while later he gave the insurance company a list containing some changes from the list given the police and adding items which he subsequently discovered stolen. Jenny also testified in court as to the cost and value of the stolen property including property which he discovered stolen only after the insurance company list had been presented. Listed below are the three sets of figures:

	In Court Testimony			Police	Insurance
	Year			Report	List
Item	Purchased	Cost	F.M. Value	Values	Values
2 speakers	1969	$ 350	$ 350	$ 190	$ 190
3 statues	1972	1800	6000	1500	1500
2 1/4 X 2 1/4
camera	1966	525	525+	525	525
16mm motion pic-
ture camera	1970	2000	2000	2000	2000
tuner & amplifier	1968	900	900	900	900
tape recorder	1969	850	850	700	850
casette recorder	1969	369	369	450	450
record player	1969	430	430	450	450
suede coat	1968	150	150	150
suede suit	1971	350	350	350	350
bag	1970	10	10	10	25
U.S. passport	1967		35-50	35	35
Swiss passport			35-50	35	35
Misc.			500-1000		500
leather coat					200
bedcover					75
jewelry	1971	1500	2500		1500
silk robe					100
8mm camera					180
1 3/4 X 1 3/4
camera	1969	150	150+		150
camera acces-
sories		850	850
"Elmo" projector	1967	180	165
slide projector	1967	125	100
Kodak projector	1972	125	125
pictures		750	750
other (est.)			3500

Despite his lack of supporting documentation we find the evidence as to the cost of the stolen property to be generally credible and sufficient. However, we have strong reservations as to his estimates of fair market value. While the owner of property is competent to testify as to its value, the weight to be given his testimony will depend upon his knowledge, experience, method of evaluation, and other relevant considerations. Biddle v. United States, 175 F. Supp. 203, 204 (E.D. Pa. 1959); Harmon v. Commissioner, 13 T.C. 373 (1949). With but two exceptions, Jenny's estimates of present value equalled or exceeded the original cost of the property. While the statues and jewelry may indeed have appreciated in value because of the nature of the items and the unique circumstances under which they were purchased, we find his conclusion as to the other items unacceptable. In particular, items such as the suede coat and the tuner and amplifier, all purchased in 1968, must have depreciated in value by December 1972 when they were stolen. It appears that Jenny's estimates are high because he based them on the replacement cost of new rather than used items. This is not an appropriate standard.

After having carefully reviewed and considered all the testimony and evidence, we conclude that petitioner's loss amounted to $8,200.We feel that this figure fairly reflects the value of the stolen property. From this amount must be deducted the $4,200 insurance reimbursement received by petitioner and the $100 required by section 165(c)(3). Accordingly, petitioner is entitled to a deduction of $3,900.

Decision will be entered Under Rule 155.

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Footnotes

• 1. All statutory references are to the Internal Revenue Code of 1954, as amended, unless otherwise indicated.