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casualty loss deduction of $51,029 for damage to her personal
property and fixtures to the condominium. Included in the
claimed casualty loss were the following homeowners association
fees:
Homeowners Association Emergency Assessment
(A Fund) Warner Village III $8,600
Homeowners Association Insurance Deductible
(B Fund) Warner Village III $4,000
Homeowners Association Insurance 10% Exclusion
(C Fund) Warner Village III $2,179
Respondent allowed petitioner’s casualty loss deduction for 1994,
and the above casualty loss is not in dispute in this case.
In the notice of deficiency, respondent disallowed
petitioner’s casualty loss deduction for 1995 because petitioner
failed to substantiate the amount of the purported casualty loss.
In the alternative, respondent contends that if the Court were to
decide that petitioner’s loss was substantiated, then the loss
was claimed in the incorrect year, and also that petitioner owned
50 percent of the Woodland Hills condominium, entitling her to
only 50 percent of the claimed loss.
Discussion
Section 165(a) generally allows a deduction for “any loss
sustained during the taxable year and not compensated for by
insurance or otherwise.” Individuals may deduct losses to
property caused by casualties such as earthquakes. Sec.
165(c)(3). The loss must exceed $100 and 10 percent of the
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Last modified: May 25, 2011