Ferris F. Boothe and Dorothy S. Boothe v. Commissioner of Internal Revenue

Ferris and Dorothy Boothe appeal the Tax Court’s decision, 82 T.C. 804, disallowing a deduction of $20,792.00 as an ordinary loss on their 1977 tax return. Appellants contend that a judgment and court costs of $20,792.00 paid by them in 1977 is deductible as an ordinary loss under 26 U.S.C. § 165(c) as a loss arising from a theft; the Commissioner allowed the deduction only as a long-term capital loss under 26 U.S.C. § 165(f).

The unusual facts in this case created sharp differences of opinion in the Tax Court, with ten judges supporting the majority opinion and eight judges supporting two…