How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask socrateaser Your Own Question
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 38910
Experience:  Retired (mostly)
Type Your Legal Question Here...
socrateaser is online now
A new question is answered every 9 seconds

I have a question regarding Illinois state civil law. Basically

Customer Question

I have a question regarding Illinois state civil law. Basically I had a contractor misappropirate a significant amount of funds during a remodeling project to my home. We have tried to recover and without going into a significant zmount of detail, that may be next to impossible. I live in Lake County, Illinois where the discretion occurred.

In doing some research I have determioned that I may be able to get a tax deduction under IRS code 165, for the loss if I can prove that it was theft. My question is under Illinois State law is there such a thing as theft under civil law, to be distinguished from criminal law. We have sufficent documentation to prove that this was theft. We have no need to prosecute as there most likely is nothing to collect.

The question is, in the state of Illinois what must I have to provide to the IRS under Code 165 that it would be accepteable for a tax deduction?
Submitted: 4 years ago.
Category: Legal
Expert:  Delta-Lawyer replied 4 years ago.

I hope this message finds you well, present circumstances excluded. As a matter of course, in Illinois, and most states for that matter, on the civil side, theft is called conversion.


Below is an excerpt description of conversion in Illinois:


Illinois courts have defined the tort of "conversion" as any unauthorized act that deprives a person of his or her property permanently or for an indefinite time. Illinois Jurisprudence, Personal Injury and Torts § 10:01. The essence of a cause of action for conversion is the wrongful deprivation of one who has a right to the immediate possession of the object unlawfully held, or the wrongful deprivation of property from the person entitled to possession. Id. The Illinois Supreme Court held to establish a cause of action for conversion, a plaintiff must prove by a preponderance of the evidence that: (1) the plaintiff has a right to the property; (2) the plaintiff has an absolute and unconditional right to the immediate possession of the property; (3) the plaintiff made a demand for possession; and (4) the defendant wrongfully and without authorization assumed control, dominion, or ownership over the property. Cirrincione v. Johnson, 184 Ill.2d 109, 114 (1998).

As to the issue at hand, in order to be able to deduct the amount lost as to this civil conversion, you are going to have to produce a judgment against the individual relative to the amount converted. Moreover, you will also have to produce documentation of reasonable attempts to collect that have been unsuccessful.


In other words, you are going to have to sue this individual with the cause of action being conversion and get a judgment against him. You will then make an attempt to collect (garnish wages, place a lien on property, etc.). If/when you are unable to collect, you will then be able to file for the tax deduction under the IRS 165 provision.


Let me know if you have any additional questions or comments. I want to make sure you are satisfied with the responses given herein.


Best wishes going forward!

Customer: replied 4 years ago.

The cost of doing what you recommend would be prohibtive. I have been told that there would be a way to comply to IRC 165 (3) under theft withiout getting a criminal judgement against this contractor. The issue is detremining what wording is necessary, We have already gone through bankrultcy court. Yiou have not told me anything I did not already now and I believe that you are miustaken about needing a criminal judgment against this person to get a tax deduction.

Expert:  Delta-Lawyer replied 4 years ago.
I am sorry for the confusion. I am not stating you need a criminal conviction, I am stating that you need a civil judgment in your favor. The civil judgment is completely separate and distinct from the criminal. Moreover, many, if not most, plaintiff's attorneys will work for you on a contingency basis. This means that you don't have to pay them unless they recover for you. As such, you may not be out any money at all since this sounds like a really cut and dry case to win.
Customer: replied 4 years ago.

I come from a family of contingency attorneys. I know all about this. Therre are no assets to collect here. I have tried for years and can not get anythiong from this contractor.


I believe that there is a way to get suffcient data for the IRS to consider this a theft loss without a trial. Possibly an admission by the contrzactor as to what transpired.


You have not told me anbything I did not know and I believe that you are wrong. I am completly unsatisfied with your reply and do not believe that you understnad Illinois state law in conjuction to thei IRS issue.

Expert:  Delta-Lawyer replied 4 years ago.
I am sorry you feel that way. The IRS is pretty steadfast in what they require for such deductions. If you could get a signed affidavit from the individual admitted to the civil conversion, then you may meet the IRS standards for this deduction. Moreover, if an attorney were to be able to obtain a default judgment against this person and not collect, they too would be able to deduct this as a business loss against their own taxes.
Expert:  Delta-Lawyer replied 4 years ago.

The first question the IRS will need answered is whether or not this was a theft. Absent a criminal conviction, the best way to prove theft is via civil judgment (called conversion). Like stated above, if you can get the man to admit in writing that he converted your money or property, then you may also meet this burden. Otherwise, it is a pretty difficult burden to meet under the Internal Revenue Code Section 165(c)(2).

Customer: replied 4 years ago.

I tis actuall IRS COde Section 165(c) 3 not 2. 3 deals with tehft. Again you have not given me any Illinois civil law whuich is what I have asked for. I am done wasdting my time telling you what I want and not getting an Illinois State civil law response.


If I get chrged any more the the $5 for this I will bitterly complain.

Expert:  socrateaser replied 4 years ago.

Different contributor here. I am not certain if you would like any further assistance, or a refund. In either case, if you will tell me what you would like, then I will answer your question, or send you to customer service for a refund -- at your request.

Thanks in advance.