David Daniel and Annette Daniel - Page 14

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            Lamphere v. Commissioner, 70 T.C. 391, 395 (1978); sec. 1.165-                               
            7(b)(1), Income Tax Regs.  The fair market values of the property                            
            must generally be ascertained by competent appraisal.  Sec.                                  
            1.165-7(a)(2)(i), Income Tax Regs.                                                           
                  If competent appraisal is not available, the actual cost of                            
            repairs to the property damaged is also acceptable as evidence of                            
            the reduction in value if the taxpayer shows that:  (a) The                                  
            repairs are necessary to restore the property to its condition                               
            immediately before the casualty; (b) the amount spent for such                               
            repairs is not excessive; (c) the repairs do not care for more                               
            than the damage suffered; and (d) the value of the property after                            
            the repairs does not as a result of the repairs exceed the value                             
            of the property immediately before the casualty.  Lamphere v.                                
            Commissioner, supra at 395-396 (1978); sec. 1.165-7(a)(2)(ii),                               
            Income Tax Regs.                                                                             
                  Petitioners argue that they have substantiated a casualty                              
            loss in the total amount of $9,571.37, based upon the following                              
            items:                                                                                       
                  Repairs & installation related to carpeting $3,819.00                                  
                  Repairs & installation of new cabinets                  1,352.37                       
                  Color television                                        300.00                         
                  Sod & mulch damage                                      100.00                         
                  Loss of trees                                           3,750.00                       
                  Pool pump                                               250.00                         
                  Respondent concedes that petitioners paid Clarence Walker                              
            $3,819 to repair water damage to the carpet and tile in their                                
            family room.  Respondent also concedes that petitioners paid                                 
            Lawton Carter $1,352.37 to install storage cabinets in                                       



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