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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
“stopped”.
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Last modified: May 25, 2011