Barbara Ann Tudyman - Page 33

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          As discussed above, petitioner sustained losses of $115,000 to                
          the structure of her home and $35,000 to her personal property.               
          This exceeds her insurance recovery by $108,000.                              
               6.   Year of Loss                                                        
                    a.   Reasonable Prospect of Recovery                                
               Petitioner may deduct her casualty loss only to the extent               
          it is not compensated by “insurance or otherwise”, e.g., by the               
          Homeowners' Association.  Sec. 165(a).  Respondent argues that                
          petitioner did not have an uncompensated loss because the                     
          prospects of repair by the Homeowners’ Association were very high             
          in 1990 when petitioner filed her amended 1988 return.  Whether               
          there is a reasonable prospect of recovery is decided based on                
          all the facts known in the taxable year.  Coastal Terminals, Inc.             
          v. Commissioner, 25 T.C. 1053 (1956); sec. 1.165-1(d)(2)(i),                  
          Income Tax Regs.3  Petitioner filed her amended 1988 return                   

               3 Sec. 1.165-1(d)(2)(i), Income Tax Regs., provides:                     
                    If a casualty or other event occurs which may                       
               result in a loss and, in the year of such casualty                       
               or event, there exists a claim for reimbursement with                    
               respect to which there is a reasonable prospect of                       
               recovery, no portion of the loss with respect to which                   
               reimbursement may be received is sustained, for                          
               purposes of section 165, until it can be ascertained                     
               with reasonable certainty whether or not such                            
               reimbursement will be received.  Whether a reasonable                    
               prospect of recovery exists with respect to a claim for                  
               reimbursement of a loss is a question of fact to be                      
               determined upon an examination of all facts and                          
               circumstances.  Whether or not such reimbursement will                   
               be received may be ascertained with reasonable                           
               certainty, for example, by a settlement of the claim,                    
               by an adjudication of the claim, or by abandonment of                    

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