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Respondent disallowed the claimed deduction in the statutory
notice of deficiency. Deductions are strictly a matter of
legislative grace, and petitioner bears the burden of proving his
entitlement to any deductions claimed. Rule 142(a); INDOPCO,
Inc. v. Commissioner, 503 U.S. 79, 84 (1992); New Colonial Ice
Co. v. Helvering, 292 U.S. 435, 440 (1934). Petitioner's burden
includes the requirement that he substantiate any deductions
claimed. Hradesky v. Commissioner, 65 T.C. 87 (1975), affd. per
curiam 540 F.2d 821 (5th Cir. 1976).
Section 165(a) allows as a deduction any loss sustained
during the taxable year and not compensated for by insurance or
otherwise. In the case of an individual's nonbusiness property,
the deduction is limited to losses that "arise from fire, storm,
shipwreck, or other casualty, or from theft." Sec. 165(c)(3).
Section 165(h)(1) provides that any casualty loss deduction
of an individual is allowed only to the extent that the amount of
the loss arising from each casualty exceeds $100. Section
165(h)(2) further limits the deduction to the amount that the
aggregate of the losses for the taxable year, in excess of the
section 165(h)(1) limitation of $100 per casualty, exceeds 10
percent of the individual's adjusted gross income for the taxable
year.
The proper measure of the amount of the loss sustained is
the difference between the fair market value of the property
immediately before and after the casualty, not to exceed its
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