                          T.C. Memo. 1999-272



                        UNITED STATES TAX COURT


                   DONALD JOHN VITALE, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent


        Docket No. 4655-97.             Filed August 12, 1999.


        Donald John Vitale, pro se.

        Richard A. Stone, for respondent.


                          MEMORANDUM OPINION

        POWELL, Special Trial Judge:   This case was heard pursuant

to the provisions of section 7443A(b)(3) and Rules 180, 181, and

182.1

        Respondent determined a deficiency in petitioner's 1994

Federal income tax in the amount of $2,006.       The sole issue is

the fair market value in 1972 of a bronze statue attributed to


        1
        Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue, and Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 2 -

James Earl Fraser.   Petitioner resided in Colesville, Maryland,

when the petition was filed in this case.

     The facts may be summarized as follows.     Petitioner's home

was burglarized some time between January 24-29, 1994.     Among the

items stolen was an 18-inch bronze sculpture (the bronze) known

as "The End of the Trail" attributed to James Earl Fraser, a

noted American artist (1876-1953).      Petitioner had acquired the

bronze from his father in 1974 by inter vivos gift.     In turn, the

father had acquired the bronze from petitioner's grandfather at

the grandfather's death in 1972.    The grandfather presumably

purchased the bronze sometime around 1920.     Petitioner is unaware

whether a gift tax return was filed in 1974 for the gift.

     There were several versions of "The End of the Trail"

produced by Fraser around 1918.    The largest version was never

cast; the plaster version, however, is at the Cowboy Hall of Fame

in Oklahoma City.    Fraser did not copyright some versions of "The

End of the Trail", and there were various copies made almost from

the date of the original release.    While petitioner believes that

the bronze he acquired was an original, he does not know which

version he had or, indeed, whether the bronze, in fact, was an

original Fraser or an old copy.

     The parties have been unable to find any sales of 18-inch

bronzes of "The End of the Trail" around 1972.     There have been

three sales of 12-inch versions:    1971 for $3,250; 1972 for
                                 - 3 -

$3,250; and 1976 for $4,000.    Larger versions have also been

sold:   32-inch in 1980 for $47,000, and 44-inch in 1975 for

$42,500.

     On his 1994 Federal income tax return petitioner claimed a

casualty loss in the amount of $25,000 based on the theft of the

bronze.    The value is based on a letter petitioner received from

Rudolf G. Wunderlich of Chicago who operates a gallery that

specializes in Fraser's works.    The letter reads, in part, as

follows:

     Fraser's bronzes were much copied as he had forgotten to put
     the copyright on one, so they were more or less in public
     domain from the time when they were first cast in 1918.
     There were knock-offs even in the early days of these and it
     is difficult to tell, in fact it is impossible to tell from
     your photograph, what this actually was. An eighteen inch
     Fraser of this type, if it is an original, probably has a
     value of around $25,000 or so. If it is one of the later
     ones, produced by The Syracuse University, then the value
     would be about half that.

     I cannot tell from this whether it is an original cast or
     not * * *.

Petitioner never had the bronze appraised and does not know

whether the bronze was included in his grandfather's estate tax

return.    There is no evidence that any appraisal of the bronze

was made in 1972.

     Respondent disallowed the deduction in its entirety.
                               - 4 -

                            Discussion

     Section 165(a) generally provides that "There shall be

allowed as a deduction any loss sustained during the taxable year

and not compensated for by insurance or otherwise."    In the case

of an individual taxpayer, a loss deduction is limited to, inter

alia, a loss from theft.   See sec. 165(c)(3).   The deduction is

further limited by section 165(h).     The amount of the deduction,

before the section 165(h) limitations, is the lesser of the fair

market value immediately before the theft or the basis (or cost)

of the property.   See sec. 1.165-7(b)(1), Income Tax Regs.; see

also Helvering v. Owens, 305 U.S. 468 (1939).     Even if we assume

that the fair market value of petitioner's bronze immediately

before the theft was $25,000, petitioner is still faced with

establishing his basis in the bronze.

     Petitioner acquired the bronze by gift from his father, and

generally his basis is the same as his father's basis increased

by the amount of any gift tax paid.    See sec. 1015(a), (d).2   If,

however, at the date of the gift, the fair market value was less

than the father's basis then petitioner's basis would be the fair

market value.   See sec. 1015(a).3   Petitioner's father acquired

     2
         There is no evidence that any gift tax was paid.
     3
          Sec. 1015(a) also provides that

     If the facts necessary to determine the basis in the hands
     of the donor * * * are unknown to the donee, the Secretary
                                                   (continued...)
                               - 5 -

the bronze from petitioner's grandfather at the latter's death in

1972, and the father's basis would be the fair market value of

the bronze at the grandfather's date of death.   See sec. 1014(a).

There is no suggestion that the fair market value on the date of

the gift was less than the fair market value on the date of the

father's death.   The issue turns, therefore, on the fair market

value of the bronze in 1972.   See United States v. Lattimore, 353

F.2d 379 (9th Cir. 1965).

     We are faced with a difficult task.   On one hand, we could

simply hold that petitioner has not established the value of the



(...continued)
     shall, if possible, obtain such facts from such donor * * *
     or any other person cognizant thereof. If the Secretary
     finds it impossible to obtain such facts, the basis in the
     hands of such donor * * * shall be the fair market value of
     such property as found by the Secretary as of the date or
     approximate date at which, according to the best information
     that the Secretary is able to obtain, such property was
     acquired by such donor * * *.

The notice of deficiency states that petitioner had "not
established the fair market value or that * * * [his] basis in
this property is more than $0.00". It is unclear whether the
failure was due to the uncertainty as to the appropriate
valuation date or to the lack of information concerning the fair
market value as of that date. Neither party has argued that
these provisions apply. We note that the Court of Appeals for
the Sixth Circuit held: "In the event that insufficient
probative evidence upon this issue [of the taxpayer's basis] is
adduced, then neither gain not [sic] loss can be allowed". James
E. Caldwell & Co. v. Commissioner, 234 F.2d 660, 661 (6th Cir.
1956), revg. and remanding per curiam 24 T.C. 597 (1955). Here,
the valuation date has been established. The uncertainty
concerns the value as of the valuation date, and we believe that
there is sufficient evidence to allow us to make a finding as to
that value.
                                 - 6 -

bronze in 1972.   See Rule 142(a).   But, we are convinced that

petitioner owned an 18-inch bronze of "The End of the Trail" and

that the bronze did have value in 1972.       We, therefore, attempt

to obtain a value bearing in mind that petitioner does have the

burden of proof, and, to paraphrase Judge L. Hand, since absolute

certainty is impossible we weigh the facts heavily against

petitioner "whose inexactitude is of his own making."       See Cohan

v. Commissioner, 39 F.2d 540, 544 (2d Cir. 1930); Clem v.

Commissioner, T.C. Memo. 1991-414.

     Neither party presented any evidence as to the 1972 value of

the 18-inch version.   Two 12-inch versions of "The End of the

Trail" were sold in 1971 and 1972 for $3,250.       The larger

versions appear to have been somewhat more valuable.       Petitioner

would have us extrapolate the value from sales, not surprisingly,

of pieces 32 inches or larger.    But, there is no basis in this

record for making such a correlation.       The 1971 and 1972 sales

have more probative value in our view.       Using our best judgment,

we find that the 1972 fair market value of the 18-inch bronze was

$4,000.



                                              Decision will be entered

                                         under Rule 155.
