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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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Last modified: May 25, 2011