- 7 - With respect to each item identified on each schedule, petitioner reported that the cost or other basis of the property was the same as the fair market value of the property before the casualty. Petitioner also reported that each item had a fair market value of zero after the casualty. However, once petitioner calculated the total purported loss for each category of property, petitioner reduced the loss for what she described as “depreciation” as follows: Category FMV before Reduction for Reported Percentage casualty depreciation loss reduction Clothing $9,217.50 $317.50 $8,900.00 3.3% Appliances 5,850.00 900.00 4,950.00 15.4 Tools 1,500.00 0.00 1,500.00 0.0 Electronics 9,200.00 1,700.00 7,500.00 18.5 On January 7, 2004, respondent issued petitioner a notice of deficiency for taxable year 2001. In the notice of deficiency, respondent disallowed petitioner’s claimed casualty loss deduction and determined petitioner is liable for a deficiency in the amount of $2,745. Discussion As a general rule, the determinations of the Commissioner in a notice of deficiency are presumed correct, and the taxpayer bears the burden of proving the Commissioner’s determinations in the notice of deficiency to be in error. Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933). As one exception to this rule, section 7491(a) places upon the Commissioner the burden of proof with respect to any factual issue relating to liability forPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011