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Claimed by Allowed by
Expense Deduction Petitioner Respondent
Casualty Loss $3,050 -0-
Business Bad Debt 2,060 -0-
Business Travel 2,940 -0-
Contract Labor 3,850 -0-
Depreciation 3,699 $1,513
OPINION
Taxpayers are expected to keep adequate books and records
to substantiate tax deductions claimed. Sec. 6001; sec. 1.6001-
1(a), (e), Income Tax Regs. Petitioner, however, has not
maintained appropriate records to substantiate the deductions at
issue, and the burden of proof as to the deductions remains on
petitioner. Rule 142(a); sec. 7491(a)(1) and (2).
A taxpayer may be entitled to a deduction for casualty
losses in an amount equal to the lesser of the decline in the
fair market value of the property caused by the casualty or the
taxpayer’s adjusted basis in the property. Sec. 165(a); sec.
1.165-7(b), Income Tax Regs.
In calculating a casualty loss, a property’s fair market
value generally must be ascertained by competent appraisal. Sec.
1.165-7(a)(2)(i), Income Tax Regs. Alternatively, the amount of
a casualty loss may be established by reasonable repair costs
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Last modified: November 10, 2007