Ferris F. Boothe and Dorothy S. Boothe, Petitioners-appellants, v. Commissioner of Internal Revenue, Respondent-appellee, 768 F.2d 1140 (9th Cir. 1985)

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U.S. Court of Appeals for the Ninth Circuit - 768 F.2d 1140 (9th Cir. 1985)

Argued and Submitted July 9, 1985. Decided Aug. 16, 1985

Ferris F. Boothe, Boothe & Powers, Portland, Or., for petitioners-appellants.

Glenn L. Archer, Jr., Michael L. Paup, Richard Farber, Robert S. Pomerance, Dept. of Justice, Washington, D.C., for respondent-appellee.

Appeal from the decision of the United States Tax Court.

Before BROWNING and ALARCON, Circuit Judges, and WILKINS,*  District Judge.


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 dissenting opinions. We agree with and adopt the dissenting opinion of Judge Korner. The decision of the Tax Court is reversed and the matter is remanded to the Tax Court for disposition consistent with Judge Korner's dissenting opinion.



The Honorable Philip C. Wilkins, Senior United States District Judge for the Eastern District of California, sitting by designation