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As discussed at paragraph A-2 above (p. 17), petitioner
must prove her adjusted basis in property for which she claims
a casualty loss. A taxpayer who acquires property by gift takes
a basis in the property equal to the lesser of the donor's basis
or the fair market value at the time of the gift. Sec. 1015. A
taxpayer who inherits property takes a basis in the property
equal to its fair market value at the date of the decedent's
death. Sec. 1014(a). Petitioner did not establish the basis she
had in property that she received by gift or inheritance. For
example, she did not show that the fair market value she provided
was determined at the time of the earthquake or at the time of
her aunt's death. She said that the chandelier, which she valued
at $14,500, was not listed as an asset in her aunt's estate tax
return. Petitioner did not show what her basis is for these
items.
Petitioner’s personal property was damaged by the
earthquake, but we think she overestimated the amount of damage.
We conclude that petitioner had personal property loss of
$35,000.
5. Insurance Payment
We conclude that the decrease in fair market value of
petitioner’s home due to the earthquake exceeded her insurance
recovery.
Petitioner received $42,000 ($30,000 plus $12,000) as
insurance reimbursement, the maximum allowed under her policy.
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