Tax Court Justice for Domestic Violence Victim

The TaxProf Blog posts today about Herrington v. Commissioner, T.C. Memo. 2011-73 (Mar. 30, 2011). This U.S. Tax Court ruling holds that a woman can rightfully deduct as theft loss funds withdrawn from her businesses by her abusive boyfriend. The petitioner dealt with an abusive and physically violent relationship with her boyfriend, a relationship that included threats on her life and on the life of her daughter. The petitioner opened two businesses under her name. Her boyfriend periodically withdrew funds from her business for his personal expenses. The petitioner neither actively consented to nor reported these withdrawals to authorities.  The Tax Court inferred that the petitioner acted in this manner in order to protect herself and her family from physical violence from her boyfriend, and gave little consideration to the fact that she did not report the theft to authorities.