Andrew E. Blanche, Jr., and Cynthia D. Blanche - Page 9

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          that year.  Consequently, petitioners were allowed the standard             
          deduction for 1992.                                                         
               Petitioners did not claim a casualty loss deduction on their           
          1991 Federal income tax return.  However, in their petition,                
          petitioners alleged they were entitled to a casualty loss for               
          1991 of "$19,000, subject to limitations" in connection with the            
          Foxbriar property.                                                          
               In an amended answer, respondent affirmatively alleged that            
          petitioners were collaterally estopped from claiming deductions             
          relating to or attributable to the Foxbriar property because the            
          District Court ruled that petitioners had neither legal nor                 
          equitable ownership of the Foxbriar property during the years at            
          issue.  However, petitioners were effectively denied review of              
          the District Court's judgment because it became moot on appeal,             
          and their appeal was dismissed for that reason.  See supra note             
          6.  This Court, therefore, believes it more prudent to resolve              
          the issues in this case on their merits rather than on the basis            
          of collateral estoppel.                                                     
               The first issue for decision is whether, for the years at              
          issue, petitioners are entitled to deductions for qualified                 
          residence interest and real property taxes, in connection with              
          the Foxbriar property, in excess of that allowed by respondent.             
          Section 163(a) provides that there shall be allowed as a                    
          deduction all interest paid or accrued within the taxable year on           

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