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Income Tax Regs.
In the case of a loss described in section 165(c)(3), the
loss is allowed only to the extent that the amount of the loss
arising from each casualty, or from each theft, exceeds $100, and
then only to the extent that the aggregate amount of such losses
exceeds 10 percent of the taxpayer’s adjusted gross income. Sec.
165(h)(1), (2)(A).
In determining the amount of loss deductible under section
165, the taxpayer’s adjusted basis in the property is the amount
of the adjusted basis prescribed in section 1.1011-1, Income Tax
Regs., for determining the loss from the sale or other
disposition of the property involved. Sec. 1.165-7(b)(1)(ii),
Income Tax Regs.; see sec. 1.165-1(c)(1), Income Tax Regs. Under
section 1.1011-1, Income Tax Regs., adjusted basis is the cost or
other basis of property under section 1012, adjusted to reflect
allowable deductions for depreciation under section 1016.
Also in determining the amount of loss deductible under
section 165, “fair market value” means “the price at which the
property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and
both having reasonable knowledge of relevant facts.” Sec.
1.170A-1(c)(2), Income Tax Regs.; sec. 20.2031-1(b), Estate Tax
Regs.; see Gay v. Commissioner, T.C. Memo. 1980-19; Black v.
Commissioner, T.C. Memo. 1977-337. The fair market value of the
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Last modified: May 25, 2011