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with their Military property during the period preceding and
following the earthquake. Petitioners’ evidence of actual
repairs, however, falls short of showing losses from earthquake
damage in excess of $9,221, the amount determined by petitioners’
insurance company. It is difficult to delineate between amounts
that were being used to renovate and improve and those that were
directly attributable to the earthquake. In addition, the
insurance company’s estimate that actual repairs attributable to
earthquake damage were $9,221 militates against petitioners’
claims. We hold that petitioners have not shown that more than
$9,221 damage occurred from the earthquake.
Finally, we must decide whether petitioners’ property had
been converted from a personal residence to business or income-
producing property prior to the time that earthquake damage was
incurred. Respondent contends that the record contradicts
petitioners’ claim that the property had been converted to
business (rental) or income-producing property. We agree. The
parties have addressed this aspect of the case in two parts.
They disagree as to whether petitioners no longer resided in the
property and whether the property had been converted to business
or income-producing property as of the occurrence of the January
17, 1994, earthquake.
The record reflects that petitioners started to move
furnishings out of the Military property beginning in October
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