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memorandum. At trial, Mrs. Daniel testified that these items
were not claimed on the return because she was in a hurry to file
the return. Petitioners have not submitted any evidence of the
loss of these items other than Mr. Daniel's own estimates given
to their insurance company the day after the flood. Based on the
record, we find that petitioners have failed to prove that they
should be allowed to include these unclaimed items in the
determination of the amount of their casualty loss.
We find that petitioners have proved that they sustained a
casualty loss in the amount of $6,171.37. After taking into
account the section 165(h) limitations, we hold petitioners are
not entitled to a casualty loss deduction.
The third issue for decision is whether petitioners are
liable for the section 6663(a) penalty for fraud for 1991 and
1992. Respondent determined in the statutory notice of
deficiency that the fraud penalty is applicable to the following
adjustments to petitioners' taxable income:
1991 1992
Real estate taxes $ 321 $ 0
Charitable contributions 6,639 6,888
Casualty loss 0 3,100
Interest income 50 52
Respondent did not assert the fraud penalty in the statutory
notice of deficiency for adjustments to petitioners' charitable
contribution deductions for 1991 and 1992 in the amounts of
$2,500 and $3,000, respectively. There is no explanation in the
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