Schonhoff v. Commissioner
United States Tax Court
T.C. Memo. 1963-213 (1963)
Facts
In 1957 Herman Schonhoff, a bachelor who lived in Missouri, enrolled in dancing lessons to meet women. After a few initial lessons, Schonhoff paid approximately $8,825 for 1,000 hours of lessons. Schonhoff claimed that he purchased the additional lessons after the manager of the dance studio implied that he could date the dance instructors. Soon after purchasing the lessons, Schonhoff learned that students were not allowed to date instructors. Schonhoff continued taking dance lessons at the studio through 1959, at which point he had taken 221 hours of lessons. Schonhoff demanded a refund from the dance studio and paid an attorney to represent him. The studio refunded Schonhoff $5,500 and rescinded his contract for future dance lessons. On his 1959 income-tax return, Schonhoff claimed a theft loss of approximately $3,925, calculated by subtracting his recovery from the dance studio, reduced by his legal fees, from the initial cost of his dance lessons. The Commissioner of Internal Revenue (the Commissioner) (defendant) disallowed the theft-loss deduction. Schonhoff petitioned the United States Tax Court for a redetermination.
Rule of Law
Issue
Holding and Reasoning (Mulroney, J.)
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