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was unsuccessful in collecting any judgment against the airport,
and, as a result, she was not compensated for her loss.4
Respondent contends that petitioner's casualty loss is not
deductible until such time as there is no reasonable prospect of
a recovery of such loss. Respondent argues that petitioner's
loss did not become uncollectible until 1995 because, up until
that time, petitioner continued her efforts to collect damages
from the airport; thus, the possibility existed that her loss
would be compensated for after 1989 up until the disposition of
her suit in October 1995. Additionally, respondent contends that
petitioner failed to substantiate either her basis in or the fair
market value of the damaged property.
Section 165(a) allows a taxpayer to deduct any loss
sustained during the taxable year and not compensated for by
insurance or otherwise. In particular, section 165(c)(3) allows
a deduction to an individual for loss of property not connected
with a trade or business or a transaction entered into for
profit, if such loss arises from fire, storm, shipwreck, or other
casualty, or from theft. Personal casualty or theft losses are
deductible only to the extent that the loss exceeds $100 and 10
percent of adjusted gross income. Sec. 165(h)(1) and (2).
4 Respondent does not contend that any portion of the losses
was compensated by insurance.
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