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This appraisal is to be used ONLY for the function
of settling your insurance claim. Any other use of
this appraisal, such as for selling the property or for
income tax deduction purposes, renders it null and
void.
The appraisal finds that the fair market value of the household
furniture prior to damage is $4,315 and in damaged condition the
value is $1,140. The replacement value of the books available
for valuation was determined to be $2,910, and the "Books and
year books badly damaged and thrown away" were "Not valued".
Respondent determined that petitioners had failed to
substantiate the casualty loss and denied the deduction in full.
Discussion
Because petitioners failed to meet the requirements of
section 7491(a)(2), the burden of proof does not shift to
respondent in this case.1
Losses may be deductible under section 165 to the extent
"not compensated for by insurance or otherwise." In the case of
an individual, section 165(c)(3) allows a taxpayer to claim as a
deduction any loss from theft or casualty sustained during the
taxable year. The loss is allowed only to the extent that it
exceeds $100 and the net casualty loss is in excess of 10 percent
of adjusted gross income. Sec. 165(h). The amount of the loss
1Sec. 7491 is effective with respect to court proceedings
arising in connection with examinations by the Commissioner
commencing after July 22, 1998, the date of its enactment by sec.
3001(a) of the Internal Revenue Service Restructuring and Reform
Act of 1998, Pub. L. 105-206, 112 Stat. 685, 726.
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Last modified: May 25, 2011