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The casualty losses that petitioner deducted were due to a
fire which severely damaged the Bronx Boulevard house on February
25, 2003. The $27,927 deduction amount reflected a $26,000 loss
for destruction of the house ($26,000 cost basis with a $112,350
fair market value before the fire) and $6,500 for petitioner’s
personal property within the house ($7,500 cost basis with a
$6,500 fair market value before the fire), after the applicable
limitations. The insurance policy covering the house was
canceled effective February 6, 2003, for nonpayment of premium.
The named insureds on this policy were petitioner’s father and
Mr. Sabastin, the record owners of the house. Petitioner
submitted some bank statements with an attached letter explaining
that he believed some of the checks were for insurance premium
payments in 2002, but the statements did not specify to whom the
checks were paid, and petitioner did not submit any canceled
checks to support his contention.
On August 8, 2005, respondent sent petitioner a statutory
notice of deficiency to his last known address. Respondent
determined a deficiency in the amount of $3,636. The deficiency
adjustments reflected $15 of unreported interest income, which
petitioner stipulated that he received, and disallowance of
petitioner’s claimed deductions for mortgage interest, real
estate taxes, and casualty loss for lack of verification.
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