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Replacement costs for all of the items total $83,830.66; actual
cash values (replacement cost minus depreciation) of all of the
items total $51,711.17.
Some of the personal property located in the house at the
time of the fire appeared to be salvageable. Petitioners hired
MasterCraft and MasterClean to clean and/or refurbish these
items. After removing these items from the Hendersonville
residence, the cleaning company determined that some of them
could not be cleaned or otherwise salvaged. The items that could
not be cleaned were not returned to petitioners and were not
included on the inventory. Petitioners estimated the value of
these items to total $4,562.
Petitioners filed a timely joint 1995 Federal income tax
return. It was prepared by a professional income tax return
preparer. They reported adjusted gross income of $42,802.
Taking into account itemized deductions totaling $29,516 and
personal exemption deductions claimed for themselves and their
four children, they reported no taxable income or Federal income
tax liability on that return.
Relevant here, on the Schedule A, Itemized Deductions,
included with their 1995 return, petitioners claimed a $21,610
casualty loss deduction, computed as follows:
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