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casualty” do not appear to be based upon information contained on
the inventory.
At trial, petitioners more or less ignored the computation
of the casualty loss deduction set forth in their return.
Instead, they relied almost exclusively on the inventory, a
document prepared not with reference to the amount of any
potential casualty loss deduction to which they might be
entitled, but rather in connection with an insurance claim under
a policy that allowed recovery based upon replacement cost. For
insurance purposes, the original cost of personal property
damaged or destroyed in the fire was not particularly important.
Consequently, the inventory does not provide sufficient
information to allow for the proper computation of the amount of
petitioners’ casualty loss deduction. Nevertheless, respondent,
in apparent recognition of the practical difficulties confronting
petitioners in establishing the information technically required
to support a casualty loss deduction, relies, at least in part,
upon the information reported on the inventory, even though that
document might not contain all of the information necessary to
properly compute the allowable deduction. In an apparent attempt
to simplify the matter, respondent now accepts petitioners’
estimate of replacement costs and Westfield’s estimate of actual
cash value (replacement cost less depreciation) of the destroyed
property as the measure of that property’s fair market value
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