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casualty loss deduction that they claimed in the 1994 joint
return. The record establishes that shortly after petitioners’
automobile accident in early November 1994 petitioners hired Mr.
Perez, an attorney, to represent them, and he submitted the
automobile damage claim to State Farm on their behalf with
respect to Mr. Mitic’s Mercedes. At no time in 1994 and 1995
during the negotiations between State Farm and Mr. Perez with
respect to the automobile damage claim did State Farm deny
liability for that claim, although it did dispute that it was
liable as the insurer of Mr. Mitic’s Mercedes for the amount
demanded by Mr. Perez on behalf of petitioners. In fact, at the
end of December 1994, State Farm offered to settle the automobile
damage claim for $40,086 plus taxes and appropriate fees.
On the record before us, we find that in 1994 petitioners
had a reasonable prospect of recovery with respect to the automo-
bile damage claim and that they could not have ascertained with
reasonable certainty in that year whether they would receive the
entire amount of that claim. We further find on the instant
record that although petitioners knew with reasonable certainty
in 1994 that they would collect some insurance with respect to
the automobile damage claim, they did not know with reasonable
certainty the amount thereof. See Commissioner v. Harwick, 184
F.2d 835 (5th Cir. 1950), affg. a Memorandum Opinion of this
Court dated Oct. 4, 1949; Hudock v. Commissioner, 65 T.C. 351,
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