Theft Loss Deduction Vaporized by Pirates.

The petitioner held a patent for a "smokeless tobacco vaporizer."  He had many years of low sales and claimed a $1 million deduction on his return for a "loss arising from theft."  He blamed the lack of success of his invention and the resulting "theft" loss on pirates stealing his intellectual property associated his patent.  The IRS disallowed the theft loss based on a complete lack of evidence of patent infringement or that the petitioner had suffered actual damages.  The petitioner claimed that Internet search engines had intentionally demoted his product, that social media had conspired to diminish his product's visibility, that the U.S. Postal Service intentionally misspelled the name of his business and that his computer had been continually hacked, among other claims.  He estimated his theft losses from $282 million to $294 million annually, but only claimed a deduction for $1 million to "prevent further victimization."  The court upheld the IRS determination, noting that the petitioner had not demonstrated that a theft had occurred as required by I.R.C. Sec. 165(e).  The court also noted that the petitioner had failed to show that he discovered the theft in the years in which the deduction was claimed rather than other years since his patent was filed.  The court upheld an accuracy-related penalty.    Sheridan v. Comr., T.C. Memo. 2015-25.