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Respondent contends that the Homeowners’ Association was
responsible for making various repairs to petitioner's home.
However, petitioner did not have a reasonable prospect of
recovery from the Homeowners’ Association when she filed her
amended 1988 return. Thus, she may deduct as a casualty loss
her real property loss even if the Homeowners’ Association was
responsible for making repairs to her home.6
B. Additions to Tax
1. Negligence
Negligence is a lack of due care or failure to do what a
reasonable and ordinarily prudent person would do under the
circumstances. Zmuda v. Commissioner, 731 F.2d 1417, 1422 (9th
Cir. 1984), affg. 79 T.C. 714 (1982); Marcello v. Commissioner,
380 F.2d 499, 506 (5th Cir. 1967), affg. in part and remanding
in part 43 T.C. 168 (1964) and T.C. Memo. 1964-299; Neely v.
Commissioner, 85 T.C. 934, 947 (1985). Petitioner must show that
she acted reasonably and prudently and exercised due care. Neely
v. Commissioner, supra.
Respondent argues that petitioner did not use reasonable
care in assessing her casualty loss from the earthquake. We
disagree.
6 Respondent does not contend that petitioner may not (as a
matter of law) deduct a casualty loss for damage to the common
areas.
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