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$11,000. Petitioners claim that, at some point, a deduction of
$11,000 was offered to petitioner to settle his claim.
Petitioners agree that, if petitioner’s adjusted basis in the
barn is used to determine the amount deductible, $1,350 is
accurate.
Petitioners presented only vague testimony regarding the
alleged statements or offers made by IRS personnel. Petitioner
did not present any evidence corroborating his testimony at trial
as to the value of the barn immediately before the casualty.
Erroneous statements concerning the law, even if made by an
IRS agent, would not bind respondent in his determination of
allowable casualty loss deductions. See Auto. Club of Mich. v.
Commissioner, 353 U.S. 180, 183-184 (1957); Bookwalter v. Mayer,
345 F.2d 476, 478 (8th Cir. 1965); Geaga v. Commissioner, T.C.
Memo. 1998-234. Offers of settlement are not admissible to prove
invalidity of a disputed claim or its amount, and evidence of
conduct or statements made in compromise negotiations is likewise
not admissible. Rule 408, Federal Rules of Evidence. Therefore,
any statements or offers made to petitioner prior to trial are
irrelevant.
We have found neither reason nor authority to negate the
application of the general rule that the deductible loss is equal
to the adjusted basis simply because a remainder interest is
involved.
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