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the other, but never by both. Petitioners failed to prove that
they lost their deposit.
d. Improvements
Respondent disallowed $9,191 of improvements that
petitioners had included in basis. Respondent determined that
the improvements were either unsubstantiated or previously
deducted as repairs. Crow Canyon needed work when petitioners
purchased it. They deducted $2,739 for repairs in 1986 and
$5,500 in 1987. Petitioners also included in basis an additional
$9,191 as improvements. Petitioners' sole substantiation for
these repairs and improvements was a few receipts from 1986
totaling $1,763.31. Petitioners failed to distinguish these
items from those amounts already deducted as repairs. We
therefore deny petitioners' increase in basis for improvements.
e. Interest Paid in Escrow
Respondent also determined that the first mortgage interest
payment of $3,670 did not belong in the basis of Crow Canyon.
Petitioners concede that they deducted $612 of the interest
payment in 1986 and are therefore not entitled to include that
amount in basis. The lender also charged petitioners a $50 fee
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