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Under section 165(a) and (c)(3), an individual is permitted
a deduction for a loss that arises from fire, storm, shipwreck,
or other casualty, or from theft. As pertinent here, the deduct-
ible amount of a loss attributable to any such casualty generally
is equal to the fair market value of the damaged property before
the casualty reduced by the fair market value of the property
after the casualty, sec. 1.165-7(b)(1)(i), Income Tax Regs., and
those fair market values are generally to be determined by
competent appraisal, sec. 1.165-7(a)(1)(i), Income Tax Regs. The
cost of repairs to the property that is damaged as a result of a
casualty is acceptable as evidence of the loss in the value of
the property if the taxpayer shows: (a) The repairs are necessary
to restore the property to its condition immediately before the
casualty; (b) the amount spent for such repairs is not excessive;
(c) the repairs do not care for more than the damage suffered;
and (d) the value of the property after the repairs does not as a
result of the repairs exceed the value of the property immedi-
9(...continued)
loss). As pertinent here, sec. 165(h)(1) permits a deduction
only to the extent that a personal casualty loss exceeds $100,
and sec. 165(h)(2) permits a deduction for such a loss only to
the extent that it exceeds 10 percent of the adjusted gross
income of the taxpayer claiming the personal casualty loss. In
the instant case, the $1,216 casualty loss that respondent
concedes petitioners incurred, reduced by $100, does not exceed
10 percent of the adjusted gross income that petitioners reported
in their 1993 return or their 1993 amended return.
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