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 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
The IRS argued that there
was no proof that the brooch had been stolen, it might have just been
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
In this case, Allen had not
established that the brooch had been stolen, therefore she cannot claim
Allen argued that she filed
a police report reporting the brooch stolen, but the Court did not find
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such a high burden of proof that it effectively repealed §23(e)(3).