15- -
Petitioners calculated the $19,520 claimed loss to the
contents of their home by totaling the replacement cost of the
contents damaged in the April flood determined by the insurance
adjuster. However, they erroneously arrived at this total
because the insurance adjuster actually calculated the
replacement cost of the contents of their home as $23,704.
Petitioners received an invoice totaling $231.03 for the cost to
replace some of their telephone equipment after the April flood.
In the notice of deficiency respondent disallowed the
casualty loss deduction in the amount of $176,896 claimed by
petitioners on their 1991 return, stating that they had not
established that the lesser of the decrease in the fair market
value of their property as a result of the 1991 floods or the
adjusted basis of their property exceeded their insurance
reimbursement. Respondent also determined that petitioners'
income for the taxable year 1991 should be increased by $14,763,
stating that the insurance reimbursement received by them because
of the February flood exceeded their sustained loss caused by
that flood by that amount.
On Schedule C of their 1991 return, petitioners claimed a
business casualty loss in the amount of $6,880. The total
business casualty loss claimed by them was detailed on Form 4684
attached to their 1991 return, consisting of losses in the
amounts of $3,000 for a Tandy computer, $750 for a Tandy hard
disk drive, $530 for a Tandy printer, and $2,600 for medical
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