Barbara Ann Tudyman - Page 34

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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                            

               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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