- 5 - property before the casualty and the fair market value of the property after the casualty (without consideration of insurance received) and (2) the adjusted basis of the property before the casualty. In this case the difference in fair market values is $1,250,000 and the adjusted basis was $672,093. The lesser amount of $672,093 is the amount of petitioners’ loss. Second, the amount of the loss deductible under section 165(a) is the loss "not compensated for by insurance"; i.e., reduced by the insurance received. See sec. 1.165.7(b)(3), Examples (1) through (3), Income Tax Regs. In this case the insurance received exceeds the loss (adjusted basis of the property prior to the casualty), and therefore there is no allowable casualty deduction. We hold that petitioners are not entitled to the $455,720 casualty loss claimed on their 1994 Federal income tax return. Accordingly, Decision will be entered under Rule 155.Page: Previous 1 2 3 4 5
Last modified: May 25, 2011