30- -
Petitioners apparently contend that their cost basis in the
contents of their home is less than the decrease in the fair
market value of the contents as a result of the casualty.
However, this seems illogical because personal property generally
declines in value from the time it is first used. Thus, even if
petitioners had shown the fair market value of the contents was
zero after the casualty, their adjusted basis in the property
might be greater than the decrease in fair market value of the
property because of the casualty.
This is particularly true in the case of computer equipment,
which has a tendency to become obsolete and declines in value.
Petitioners included the claimed original cost of four Tandy
computers with hard drives, one Tandy micro-computer, and three
Tandy printers, totaling $23,700, as part of the $58,202.28
claimed loss to the contents of their home. Insofar as disclosed
by the record, the original cost basis of the computer equipment
would not be less than the decrease in fair market value of the
equipment as a result of the casualty, even if petitioners had
shown that the equipment was ruined in the flood.
Furthermore, petitioners claimed depreciation related to
three computers, three printers, and a hard disk drive in amounts
totaling $1,240 on each of their joint Federal income tax returns
for the taxable years 1988, 1989, and 1990, and they claimed a
section 179 deduction for a hard disk drive in the amount of
$1,500 on their joint Federal income tax return for the taxable
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