California Tax Office Denies Deduction for Real Estate Losses

Losing money in a real estate scheme doesn’t entitle a taxpayer to claim a theft loss deduction from state income tax, the California Office of Tax Appeals ruled.

Nasrin Etessam and her deceased husband, Dariush Etessam, appealed the Franchise Tax Board assessment of an additional $460,883 plus interest for tax years 2014 to 2017. The couple argued they suffered a loss of $6.3 million from being fraudulently induced to buy a leasehold interest in a Clarion Hotel property that never produced income.

A three-judge panel sided with the board, relying on a court ruling in a related ...