- 6 -
Cost or other basis of each property $139,647
Insurance or other reimbursement 107,022
Fair market value before casualty 133,012
Fair market value after casualty - 0 -
Amount of loss 133,012
Amount of loss not reimbursed 25,990
Less $100 floor 100
Less 10 percent of adjusted gross income 4,280
Casualty loss claimed 21,610
In the notice of deficiency, respondent disallowed, at least
mathematically, $20,011.04 of the casualty loss deduction here in
dispute. A fair reading of the explanation for this adjustment
suggests that respondent intended to disallow the entire amount.
Nevertheless, we proceed as though petitioners are entitled to a
casualty loss deduction of at least $1,598.96 for 1995. In the
notice of deficiency respondent also determined that petitioners
are liable for a section 6662(a) penalty, but respondent now
agrees that they are not.
Discussion
Subject to certain limitations, an individual is entitled to
a deduction for “any loss[es] sustained during the taxable year
and not compensated for by insurance or otherwise” that “arise
from fire * * * or other casualty”. Sec. 165(a), (c)(3), (h)(1)
and (2).
To properly compute a casualty loss deduction, the following
values of the damaged or destroyed property must be established:
(1) Fair market value before the casualty; (2) fair market value
after the casualty; and (3) the taxpayer’s basis in the property.
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Last modified: May 25, 2011