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The cost of repairs may be considered if the taxpayer shows
that (a) the repairs are necessary to restore the property to its
condition immediately before the casualty, (b) the amount spent
for the repairs is not excessive, (c) the repairs are made only
to the damaged portion of the property, and (d) the repairs do
not cause the value of the property to exceed the value of the
property immediately before the casualty. Lamphere v.
Commissioner, supra at 395-396; Farber v. Commissioner, 57 T.C.
714, 719 (1972); sec. 1.165-7(a)(2)(ii), Income Tax Regs.
We note that in the instant case the claimed casualty loss
is based upon the itemized repair list attached to petitioner’s
1995 return. The parties stipulated that this repair list is
identical to the State Farm estimated repair list, dated June 20,
1996. The parties further stipulated that none of the repairs
were actually made, nor did petitioner expend any money for the
repairs. Simply put, petitioner made no repairs to her
condominium unit. According to Farber v. Commissioner, supra at
719, in order for a taxpayer to use the “cost of repair” method
of valuation, the taxpayer must first show that “actual repairs
and expenditures, not just estimates” were made. We stated in
Farber that “in cases where this Court has permitted the ‘cost of
2(...continued)
for more than the damage suffered, and (d) the value of
the property after the repairs does not as a result of
the repairs exceed the value of the property
immediately before the casualty.
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