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property to its condition immediately before the casualty,
(b) the amount spent for such repairs is not excessive, (c)
the repairs do not care for more than the damage suffered,
and (d) the value of the property after the repairs does not
as a result of the repairs exceed the value of the property
immediately before the casualty.
In the case of an item held for personal use, the amount
deductible is governed by section 1.165-7(b)(1), Income Tax
Regs., which provides that the amount of the loss to be taken
into account for purposes of section 165(a) shall be the lesser
of: (1) The amount which is equal to the fair market value of
the property immediately before the casualty reduced by the fair
market value of the property immediately after the casualty, or
(2) the amount of the adjusted basis for determining the loss
from the sale or other disposition of the property involved.
Section 6001 and the regulations promulgated thereunder
require taxpayers to maintain records sufficient to permit
verification of income and expenses. As a general rule, if the
trial record provides sufficient evidence that the taxpayer has
incurred a deductible expense, but the taxpayer is unable to
adequately substantiate the precise amount of the deduction to
which he is otherwise entitled, the Court may estimate the amount
for the deductible expense and allow the deduction to that
extent, bearing heavily against the taxpayer whose inexactitude
in substantiating the amount of the expense is of his own making.
Cohan v. Commissioner, 39 F.2d 540 (2d Cir. 1930). However, in
order for the Court to estimate the amount of an expense, the
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Last modified: May 25, 2011