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deficiency respondent determined that petitioners' income for
1991 should be reduced by the $32,040. The parties agree to the
reduction in income. Petitioners' receipt of the $32,040 will be
considered in computing the casualty loss deduction to which
petitioners may be entitled in 1991 caused by the heavy rain and
wind which occurred in 1988.
Petitioners claimed a deduction of $119,435 on their joint
Federal income tax return for the taxable year 1989 as a
"casualty carry over from 1988" relating to the $142,729 casualty
loss deduction claimed by them on their 1988 return. Respondent
sent a notice of deficiency to petitioners for 1989 disallowing
the casualty loss carryover deduction. Petitioners filed their
petition with this Court seeking a redetermination of their
Federal income tax for 1989. The case was settled prior to
trial. Pursuant to the settlement, petitioners conceded that
they were not entitled to the casualty loss carryover deduction
claimed by them for 1989 in exchange for respondent's agreement
that the casualty loss deduction in the amount of $142,729
claimed by petitioners on their 1988 return was properly before
the Court for the taxable year 1991.
Petitioners claimed a miscellaneous deduction in the amount
of $81,643 on their joint Federal income tax return for the
taxable year 1990 as a "casualty carry over from 1988-1989"
relating to the $142,729 casualty loss deduction claimed by
petitioners on their 1988 return. In the notice of deficiency
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