- 7 -
Of this amount, $295,000 was claimed for a casualty or theft loss
in respect of the Hazelwood property.
In support of their claimed casualty or theft loss,
petitioners attached Form 4684, Casualties and Thefts, to their
return. In Section B, Business and Income-Producing Property,
petitioners computed their claimed loss as follows:
Cost or adjusted basis $300,000
Less: insurance or other reimbursement -0-
Fair market value before casualty/theft 360,000
Fair market value after casualty/theft 65,000
Diminution in fair market value 295,000
Lesser of: cost or adjusted basis or
Diminution in fair market value 295,000
Casualty or theft loss 295,000
Discussion
A. Loss Deduction5
1. The Parties’ Contentions
Petitioners contend they are entitled to a casualty or theft
loss based on theft of the furnishings and fixtures of the
Hazelwood property and the subsequent foreclosure on the property
itself. Petitioners further contend that they are entitled to
deduct the loss in 1997 because that was the year in which they
surrendered possession of the Hazelwood property. In this
regard, petitioners allege that after the foreclosure sale on
5 We decide this issue without regard to the burden of
proof. Accordingly, we need not decide whether the general rule
of sec. 7491(a)(1) is applicable to this issue. See Higbee v.
Commissioner, 116 T.C. 438 (2001).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011