Norman John Haas III and Susan Renee Haas - Page 12

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         company estimate of damage and no detailed and coherent                      
         description of the damage by petitioners themselves.  The police             
         report states only that there was “extensive” damage to the                  
         interior and exterior of the truck.  The notes of respondent’s               
         examining agent indicate that petitioners reported to her that,              
         as a result of the theft, they repaired the frame and body of the            
         truck and replaced the “stereo, glass, tires, engine, and seats”.            
             Evidence of the cost of repair to damaged property is                   
         acceptable as evidence of loss if:  (a) The repair was necessary             
         to restore the property to its condition just before the                     
         casualty; (b) the repair costs are not excessive; (c) the repair             
         does not exceed the damage; and (d) the value of the property                
         after the repair does not, as a result of the repair, exceed the             
         precasualty value.  Sec. 1.165-7(a)(2)(ii), Income Tax Regs.                 
              Petitioners introduced into the record evidence in the form             
         of receipts for the repair and replacement of some items in                  
         connection with the theft of and damage to the truck in 2001.                
         Most of the receipts represent expenditures for replacing the                
         engine and tires of the truck.  According to the supplemental                
         police report, however, the Border Patrol “stopped” the stolen               
         truck at a gas station.  The Court surmises that the truck was               
         being driven (with operating engine and tires) at the time it was            

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