- 10 - before the fire.1 Respondent argues that petitioners’ casualty loss deduction should be computed as follows: Fair market value of personal property before fire $51,711.17 Less amount reimbursed 45,732.06 Less $100 (sec. 165(h)(1)) 100.00 Less 10 percent of adjusted gross income (sec. 165(h)(2)) 4,280.00 Allowable casualty loss deduction 1,599.11 In effect, in the above computation, respondent considers the property damaged or destroyed in the fire to have had no fair market value after the fire. Furthermore, to petitioners’ benefit, respondent treats the property’s fair market value prior to the fire and petitioner’s basis in the property as equal, which is highly unlikely. We consider respondent’s computation to be reasonable under the circumstances, and note that, if only by coincidence, it provides support for the adjustment made in the notice of deficiency. The computation, however, does not take into account the value of those items removed from the Hendersonville residence by the cleaning company, determined to be unsalvageable, and never returned to petitioners. We accept petitioners’ $4,562 estimate of value of those items, adopt respondent’s approach as to the significance of that estimate, 1 Subtracting depreciation from replacement cost can be an acceptable method of determining the fair market value of an item of personal property. See Cornelius v. Commissioner, 56 T.C. 976 (1971).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011