Mary Frances Allen v. Commissioner
16 T.C. 163 (Tax Ct. 1951)

  • Allen lost a brooch while visiting a museum. When she filed her taxes, she deducted the value of the brooch, $1800 as a deduction for theft.
  • The IRS denied the deduction. Allen appealed.
    • Allen argued that the applicable section of the tax code (then 26 U.S.C. 23(e)(3), now known as 165(c)(3)) allowed for deductions for property lost through theft.
    • The IRS argued that there was no proof that the brooch had been stolen, it might have just been lost.
  • The Tax Court found for the IRS and denied the deduction.
    • The Tax Court found that the burden of proof was on the taxpayer to show that the property had been stolen.
    • In this case, Allen had not established that the brooch had been stolen, therefore she cannot claim the deduction.
      • Allen argued that she filed a police report reporting the brooch stolen, but the Court did not find that persuasive.
  • In a dissent it was argued that the most probable way Allen lost her brooch was by theft, and to demand that Allen introduce eyewitness testimony that it was stolen was such a high burden of proof that it effectively repealed 23(e)(3).