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Original cost of
old warehouse (June 1979) $148,479
Cost of reconstruction 698,935
Amortizable costs 112,360
Total Costs 959,774
Less:
Depreciation claimed 1(122,495)
Insurance Proceeds (553,793)
Amortization claimed (109,653)
Casualty Loss Claimed 173,833
1This figure includes $7,424 in depreciation for 1995.
The Boyles did not report any gain realized from the destruction
of the old warehouse on their 1995 return.
In his notice of deficiency, respondent disallowed the
claimed casualty loss because the insurance proceeds exceeded the
Boyles’ allowable loss. Respondent also disallowed the
depreciation deduction claimed for 1995, and petitioners have
conceded this adjustment.
OPINION
Section 165(a) and (c) allows a deduction for losses arising
from fire or other qualifying casualty sustained during the
taxable year and not compensated for by insurance or otherwise
(casualty loss). See also sec. 1.165-7(a)(1), Income Tax Regs.
A casualty loss is “treated as sustained during the taxable year
in which the loss occurs as evidenced by closed and completed
transactions and as fixed by identifiable events occurring in
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Last modified: May 25, 2011