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Petitioner had an insurance policy with State Farm Mutual
Insurance Co., but, unfortunately, it did not cover flooding, so
he did not file a claim. Petitioner had the water pumped out of
his basement. He then inventoried the damage to his house and
his personal property.
Petitioner timely filed a Federal income tax return
electronically for the 2001 taxable year. On his Form 1040, U.S.
Individual Income Tax Return, petitioner claimed a casualty loss
deduction of $35,410, after application of the $100 limitation
pursuant to section 165(h)(1) and the 10 percent of adjusted
gross income limitation pursuant to section 165(h)(2).
Petitioner attached to the Form 1040 a Schedule A, Itemized
Deductions, and a Form 4684, Casualties and Thefts.
On Form 4684, petitioner described the property for which he
claimed a casualty loss as: “Furniture, carpeting, clothing,
books, artwork, electronics, tools, software, computers, and
appliances”. The Form 4684 reflected in pertinent part as
follows:
Section A--Personal Use Property
Property Description Furniture and carpeting
Line A2. Cost or other basis of each property$15,800
Line A3. Insurance or other reimbursement 0
Line A5. Fair market value before casualty or theft 12,600
Line A6. Fair market value after casualty or theft0
Line A7. Subtract line 6 from line 5 12,600
Line A8. Enter the smaller of line 2 or line 712,600
Line A9. Subtract line 3 from line 8 12,600
Property Description Clothing, books, artwork
Line A2. Cost or other basis of each property$12,700
Line A3. Insurance or other reimbursement 0
Line A5. Fair market value before casualty or theft 11,900
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Last modified: May 25, 2011