Trinity Meadows Raceway, Inc., Jack M. Lenavitt, A Person Other Than The Tax Matters Person - Page 9

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                    (b) Amount deductible--(1) General rule.  In the                  
               case of any casualty loss whether or not incurred in a                 
               trade or business or in any transaction entered into                   
               for profit, the amount of loss to be taken into account                
               for purposes of section 165(a) shall be the lesser of                  
               either--                                                               
                              (i) The amount which is equal                           
                         to the fair market value of the                              
                         property immediately before the                              
                         casualty reduced by the fair market                          
                         value of the property immediately                            
                         after the casualty; or                                       
                              (ii) The amount of the                                  
                         adjusted basis prescribed in                                 
                         �1.1011-1 for determining the loss                           
                         from the sale or other disposition                           
                         of the property involved.  However,                          
                         if the property used in a trade or                           
                         business or held for the production                          
                         of income is totally destroyed by                            
                         casualty, and if the fair market                             
                         value of such property immediately                           
                         before the casualty is less than                             
                         the adjusted basis of such                                   
                         property, the amount of the                                  
                         adjusted basis of such property                              
                         shall be treated as the amount of                            
                         the loss for purposes of section                             
                         165(a).                                                      
                         (2) Aggregation of property for                              
                    computing loss.  (i) A loss incurred in a                         
                    trade or business or in any transaction                           
                    entered into for profit shall be determined                       
                    under subparagraph (1) of this paragraph by                       
                    reference to the single, identifiable                             
                    property damaged or destroyed.  Thus, for                         
                    example, in determining the fair market value                     
                    of the property before and after the casualty                     
                    in a case where damage by casualty has                            
                    occurred to a building and ornamental or                          
                    fruit trees used in a trade or business, the                      
                    decrease in value shall be measured by taking                     
                    the building and trees into account                               




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Last modified: May 25, 2011