Jeppsen v. Commissioner of Internal Revenue

EBEL, Circuit Judge.

In 1987, a stockbroker misappropriated $194,000 from petitioner-appellant Harv L. Jeppsen. Jeppsen claimed a deduction for this theft loss on his 1987 federal income tax return. In 1988, Jeppsen began a seven-year litigation campaign to recover his stolen money. In 1992, respondent-appellee Commissioner of Internal Revenue (“the IRS”) disallowed Jeppsen’s 1987 theft loss deduction, on the grounds that it was reasonably foreseeable by the end of 1987 that Jeppsen would recover the stolen money. Shortly thereafter, Jeppsen challenged this disallowance in tax court.

In March,…