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Deductions are a matter of legislative grace, and generally
the taxpayer bears the burden of proving entitlement to any
deduction claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992). The burden of proof has not shifted to
respondent pursuant to section 7491(a). While the examination of
the tax returns in issue commenced after July 22, 1998,
petitioner has not satisfied any of the criteria of section
7491(a)(2)(A) and (B).3
Casualty Loss
Section 165(a) and (c)(3) allows an individual a deduction
for loss of property not connected with a trade or business or a
transaction entered into for profit if the loss arises from fire,
storm, shipwreck, or other casualty and was not compensated for
by insurance or otherwise. “Other casualty” is defined as a loss
proximately caused by a sudden, unexpected, or unusual event,
excluding the progressive deterioration of property through a
steadily operating cause or by normal depreciation. Maher v.
Commissioner, 680 F.2d 91, 92 (11th Cir. 1982), affg. 76 T.C. 593
(1981); Coleman v. Commissioner, 76 T.C. 580, 589 (1981). There
3 As previously noted, respondent asserts an increased
deficiency and increased addition to tax for 1995. While Rule
142(a) provides that the burden of proof shall be on respondent
to the extent that there is an increase in deficiency, the
claimed increase results from a computational issue, the
abatement of an assessment by respondent. Petitioner does not
dispute the claimed corrected computation of the deficiency.
Thus, the burden of proof remains with petitioner to establish
the existence of and amount of the casualty loss.
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