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allowed as a deduction is the lesser of: (1) The fair market
value of the property immediately before the loss, or (2) the
adjusted basis of the property. Helvering v. Owens, 305 U.S. 468
(1939); sec. 1.165-7(a)(2) and (b), Income Tax Regs.
The basis of property acquired by purchase is its cost.
Sec. 1012. The basis of inherited property ordinarily is the
fair market value of the property at the date of the decedent's
death. Sec. 1014. The basis of property acquired by gift is the
same as it would be in the hands of the donor or the last
preceding owner by whom it was not acquired by gift, except that
if such basis is greater than the fair market value of the
property at the time of the gift, the basis for determining loss
is the fair market value of the property. Sec. 1015.
In order for the Court to determine whether petitioners are
entitled to a casualty loss, petitioners' basis in the property
damaged or destroyed must be known. Where petitioners fail to
prove that basis, the Court is unable to determine the amount of
the loss that is deductible. Zmuda v. Commissioner, 79 T.C. 714,
728-729 (1982), affd. 731 F.2d 1417 (9th Cir. 1984); Millsap v.
Commissioner, 46 T.C. 751, 760 (1966), affd. 387 F.2d 420 (8th
Cir. 1968).
The Court presumes that petitioners acquired the items of
furniture by purchase, but they offered no evidence of the
acquisition cost of the items. The books that were damaged were
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