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shortly before Aetna denied her claim for damage under the
Homeowners’ Association policy.4 Respondent argues that
petitioner had a reasonable prospect of recovery when she filed
her return because Aetna had not yet denied her claim. We
disagree. The Homeowners’ Association was short on funds in 1990
and had made only minimal repairs to petitioner's home in April
1990 when she filed her amended 1988 return. It was uncertain
whether it could afford to make all of the repairs for which it
was responsible. Notwithstanding the fact that the Homeowners’
Association could have specially assessed its members to pay for
repairs, there is no evidence that it did so in 1990.5 The fact
that it could have done so did not give petitioner a reasonable
prospect of recovery in 1990. We conclude that petitioner had
losses from the earthquake for which she had no reasonable
prospect of recovery from insurance or otherwise and which she
properly deducted on her amended 1988 return.
b. Role of the Homeowners’ Association
3(...continued)
the claim. * * *
4 Petitioner contends that she filed her amended 1988 return
on Apr. 14, 1990, after Aetna Life & Casualty (Aetna) denied her
claim for damage under the Crestview Park Condominium Homeowners'
Association (Homeowners' Association) policy. The record clearly
shows, however, that she filed her return on Apr. 9, 1990, before
Aetna denied her claim.
5 Petitioner said that the Homeowners' Association made a
special assessment equal to 6 months of dues, but it appears that
was in 1991 or later.
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