37- -
statement, invoices, and canceled checks submitted by petitioners
falls far short of the amount claimed. By contrast, the
insurance adjuster's worksheet, which we find convincing, allowed
only $28,425.39 to repair the home.
Moreover, petitioners presented no evidence that the amount
they claim as the cost to repair their home is not greater than
necessary to restore their home to its condition prior to the
April flood. Such evidence is required by section 1.165-
7(a)(2)(ii), Income Tax Regs. Petitioners testified that during
or after 1990, the size of their home was increased to 10,000
square feet. We think it is improbable that the amounts spent by
petitioners to repair their home after the April flood merely
restored their home to its condition before the casualty.
Petitioners erred by calculating their claimed loss of
$19,520 to the contents of their home based on the insurance
adjuster's estimate of the replacement cost of the contents.
Section 1.165-7(a)(2)(ii), Income Tax Regs., provides that the
cost of repairs may be used to measure a casualty loss, but only
if the value of the property after the repairs does not as a
result of the repairs exceed the value of the property
immediately before the casualty. To use replacement cost as the
cost of repairs may violate this requirement since the fair
market value of the replacement property will be greater than the
fair market value of the replaced property immediately before the
casualty. Hernandez v. Commissioner, 72 T.C. 1234, 1240-1241
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