29- -
In addition, petitioners presented no evidence, as required
by section 1.165-7(a)(2)(ii), Income Tax Regs., that the amount
they claim as the cost to repair their home is not greater than
necessary to restore the home to its condition before the
February flood. Petitioners testified that during or after 1990,
the size of their home was increased to 10,000 square feet. We
therefore think it is improbable that the amounts spent by them
to repair their home after February 1991 restored their home to
its condition before the casualty.
Petitioners calculated the $58,202.28 claimed loss to the
contents of their home by totaling the claimed original cost of
the contents. They presented no evidence which substantiates the
claimed original cost.
Petitioners erred by calculating the claimed loss to the
contents of their home based on the claimed original cost of the
contents. Section 1.165-7(b)(1), Income Tax Regs., provides that
the proper measure of the amount of a casualty loss is the lesser
of the decrease in the fair market value of the property as a
result of the casualty or the adjusted basis for determining the
loss from the sale or other disposition of the property involved.
Section 1.165-7(a)(2)(i) and (ii), Income Tax Regs., provides
that the cost to repair property damaged by a casualty may be
used to determine its decrease in fair market value as a result
of the casualty when a competent appraisal has not been obtained.
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