Jane B. Oliver and Robert P. Oliver - Page 16

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          billing software.  Because the computer was used by petitioners             
          for business purposes, their ABIC insurance policy did not cover            
          the loss.                                                                   
               Petitioners had been depreciating the Tandy computer, Tandy            
          printer, and Tandy hard disk drive since the taxable year 1988.             
          They claimed depreciation related to three computers, three                 
          printers, and a hard disk drive in amounts totaling $1,240 on               
          each of their Federal income tax returns for the taxable years              
          1988, 1989, and 1990.  It is not clear which of the computers               
          petitioners had been depreciating was the one for which the                 
          $6,880 business casualty loss was claimed.                                  
               In the notice of deficiency respondent disallowed the                  
          business casualty loss deduction in the amount of $6,880 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 computer(s) as a result of the 1991 floods or                
          their adjusted basis in the computer(s) exceeded their insurance            
          reimbursement.                                                              
               In 1991, the water pipes in petitioners' kitchen broke.                
          They received reimbursement in the amount of $7,744.69 from                 
          Kemper Insurance Co. for the damage to the pipes.  Their ABIC               
          insurance policy did not cover the damage to the pipes in the               
          kitchen because they were located below the flood water line.  At           
          trial, petitioners claimed for the first time that they had                 
          incurred a casualty loss of $12,566.62 in 1991, before insurance            




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