Barbara Ann Tudyman - Page 17

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               By notices of deficiency issued on February 19, 1993,                    
          respondent disallowed all of petitioner's casualty loss deduction             
          and associated carrybacks and carryforward.                                   
          A. Casualty Loss Deduction                                                    
               1.   Contentions of the Parties                                          
               Petitioner argues that she may deduct her losses from the                
          earthquake as a casualty loss.  She contends that she offered                 
          evidence showing the difference between the fair market values of             
          her home and personal property before and after the earthquake                
          and the adjusted bases of the property, and that respondent                   
          offered no evidence that the earthquake did not cause the damage.             
               Respondent contends that petitioner has not proven that her              
          losses exceeded the amount of insurance proceeds she received, or             
          that the fair market value of the property was less after the                 
          earthquake than before.                                                       
               As discussed below, we conclude that petitioner’s losses                 
          were greater than her insurance reimbursement but less than the               
          amount she deducted.                                                          
               2.   Eligibility for a Casualty Loss Deduction                           
               Individuals generally may deduct losses to property caused               
          by casualties such as earthquakes.  Sec. 165(c)(3).  The loss                 
          must exceed $100 and 10 percent of the individual’s adjusted                  
          gross income.  Sec. 165(h)(1) and (2)(A)(ii).  Taxpayers may not              

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