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The cost of repairs may be considered if the taxpayer shows
that: (a) The repairs are necessary to restore the property to
its condition immediately before the casualty, (b) the amount
spent for the repairs is not excessive, (c) the repairs are made
only to the damaged portion of the property, and (d) the repairs
do not cause the value of the property to exceed the value of
the property immediately before the casualty. Lamphere v.
Commissioner, supra; Farber v. Commissioner, 57 T.C. 714, 719
(1972); sec. 1.165-7(a)(2)(ii), Income Tax Regs.
Respondent's determination is presumed to be correct. Rule
142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
3. Structural Damage to Petitioner’s House
The fair market value of petitioner’s house before the
earthquake was $324,000, the amount petitioner had paid for it
about 11 months earlier.
The parties each called expert witnesses to give their
opinions about the structural damage to petitioner's house caused
by the earthquake. Expert witnesses' opinions can help the Court
to understand subjects requiring specialized training, knowledge,
or judgment. However, the Court is not bound by the experts'
2(...continued)
restore the property to its condition immediately
before the casualty, (b) the amount spent for such
repairs is not excessive, (c) the repairs do not care
for more than the damage suffered, and (d) the value
of the property after the repairs does not as a result
of the repairs exceed the value of the property
immediately before the casualty.
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