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Petitioner inventoried and estimated the value of her
damaged personal property shortly after the earthquake.
Petitioner’s accountant, Robert Kern, gave her an Internal
Revenue Service worksheet to complete before he prepared her
amended 1988 return. On the worksheet, petitioner estimated the
cost and fair market value of her damaged personal property
items. She spent 50 to 100 hours researching the cost and fair
market value of the damaged items. She called stores to get the
cost of items for which she did not have receipts.
The earthquake destroyed some of petitioner’s personal
property, such as mirrors, statues, vases, and figurines. It
damaged other items such as bookcases, tables, chairs, a
grandfather clock, rugs, and appliances. Petitioner had to have
some of the damaged items repaired. For example, petitioner had
the buffet server, table, and chairs repaired.
Petitioner asked an appraiser, Mervyn Cohn (Cohn), to verify
the cost and fair market value of the damaged items. He checked
price guides, called retailers, and concluded that petitioner’s
estimates were reasonable. He discounted the pre-earthquake cost
or fair market value by 40 percent. He estimated that the value
of petitioner's personal property was $86,398 before the
earthquake. He assumed that the personal property listed by
petitioner as damaged by the earthquake had no salvage value.
He did not separately estimate the salvage value of each item.
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