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Respondent denied petitioners' claim for a casualty loss
deduction relating to Since Gussie's death, arguing that
petitioners had improperly used Since Gussie's fair market value
at the time of death to compute the amount of the deduction when,
by petitioners' own calculations, Since Gussie's fair market
value exceeded adjusted basis. Respondent further argues that
petitioners' failure to produce any documentation concerning
Since Gussie's adjusted basis precludes their entitlement to any
casualty loss whatsoever. Petitioners argue that, despite the
plain language of the statute and the accompanying regulation,
the amount of the casualty loss deduction with respect to Since
Gussie should be determined with regard to her fair market value
rather than their adjusted basis, regardless of whether Since
Gussie's fair market value exceeded their adjusted basis at the
time of death. In so doing, petitioners contend that race horses
are distinct assets and should be treated as such. Petitioners
argue on brief that "An Affirmed can not be treated exactly the
same as his anvil nor would the human conscience allow it." (Fn.
refs. omitted.)9 Petitioners further state:
That [Since Gussie's] adjusted basis was $467 at the
time of death is of no importance, to the material
matter or economic impact, beyond its part in the
accounting equation. The great triple crown winner,
Secretariat, was a home-bred and never had an adjusted
basis; he under the Internal Revenue Code and
9 "Affirmed" refers to thoroughbred horse-racing's 1978
Triple Crown winner.
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