Lee F. McClune and Harriet R. McClune - Page 6

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               Petitioners deducted 100 percent of the alleged value of the           
          barn less the amount attributable to the salvageable lumber.                
          Under any theory, they are entitled to deduct only the value of             
          petitioner’s 25-percent interest in the barn.  However, the value           
          of petitioner’s 25-percent interest would be deductible only if             
          that value were less than the amount of his adjusted basis in the           
          barn.  Sec. 1.165-7(b)(1), Income Tax Regs.  Because the adjusted           
          basis is less than the value in this situation, petitioners are             
          limited to deducting the adjusted basis as a casualty loss.                 
               To reflect respondent’s concession as to the casualty loss             
          deduction,                                                                  

                                                  Decision will be entered            
                                             under Rule 155.                          
























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