Gerald and Kathleen Chamales - Page 18




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          to invest substantial funds in remodeling and upgrading their               
          homes.  Hence, petitioners’ difficulties are more akin to a                 
          temporary fluctuation in value, which no court has found to                 
          support a deduction under section 165(c)(3).  We therefore hold             
          that petitioners have failed to establish their entitlement to a            
          casualty loss deduction.  Respondent’s determination of a                   
          deficiency is sustained.                                                    
               Additionally, in light of our holding that the element of              
          physical damage must be present, we also grant respondent’s                 
          motion in limine to exclude the report of petitioners’ expert,              
          Randall Bell (Bell), a real estate appraiser.  Bell’s report                
          focuses on the diminution in value that can result from the                 
          stigma which attaches to crime scene property.  As this                     
          information relates solely to the issue of buyer resistance, the            
          report is irrelevant to our decision.  Furthermore, we note that            
          because Bell bases his conclusions on studies of actual murder              
          scenes and offers no examples or statistics regarding the effect            
          of a homicide on values of either neighboring properties or the             
          killer’s residence, the probative worth of his report, even if              
          admitted, would at best be minimal.                                         













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