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Some of the books were given to him, as were the items shown as
memorabilia. Petitioner did not seek any expert advice
concerning the value of the items destroyed. Petitioner has no
records, receipts, or other documents concerning the cost of any
of the items destroyed nor did petitioner attempt to reconstruct
such cost. Petitioner did not seek any professional advice
concerning the preparation of his 1999 tax return. Petitioner
received $12,500 from the university’s insurance company for the
loss that he suffered from the fire.
Upon audit, respondent allowed a casualty loss deduction of
$9,448 and disallowed the remainder of the deductions claimed on
petitioner’s return.
Discussion
Generally, the burden of proving that respondent’s
determination is incorrect is on petitioner. Section 7491(a)
provides, in limited circumstances, that the burden shifts to
respondent. Petitioner does not fall within these limited
circumstances and the burden of proof is on petitioner.
Casualty Loss
Section 165(a) allows “as a deduction any loss sustained
during the taxable year and not compensated for by insurance or
otherwise.” The general rule for determining the amount of a
casualty loss, whether or not incurred in a trade or business or
in a transaction for profit, is the lesser of (i) the fair market
value before the casualty reduced by the fair market value after
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Last modified: May 25, 2011