TAX COURT OPINION

Case: Jennifer Simons f.k.a. Jennifer Olavarria f.k.a. Jennifer Jensen
Docket Number: 27503-07S
Judge: Colvin
Opinion Type: bench
Filed: 10/14/2008
Pages: 7

UNITED STATES TAX COURT WASHINGTON , DC 2021 7 JENNIFER SIMONS f .k .a . JENNIFER OLAVARRIA f .k .a . JENNIFER JENSEN , Petitione r V . COMMISSIONER OF INTERNAL REVENUE , Respondent O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial of the above case before Chief Special Trial Judge Peter J . Panuthos at Tampa, Florida, on September 9, 2008, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of decision will be entered for respondep . and opinion, ;~l (Signed) Peter J . Panuthos Special Trial Judg e Dated : Washington, D .C . October 14, 2008 SERVED OU 155-2098 1 Bench Opinion by Chief Special Trial Judge Patt-R-J . Panuthos P e.{ c r " 3 PS P 2 September 9, 200 8 3 Jennifer Simons f .k .a . Jennifer Olavarria f .k .a . 4 Jennifer Jensen Docket Number 27503-07 S 5 The Court has decided to render oral findings 6 of fact and opinion in this case and the following represents 7 the Court's oral findings of fact and opinion . The ora l 8 findings of fact and opinion shall not be relied upon as 9 precedent in any other case . 10 This case was heard pursuant to the provisions 11 of Section 7463 of the Internal Revenue Code . The decision to 12 be entered is not reviewable by any other court, and thi s 13 opinion should not be cited as authority . Unless otherwise 14 indicated, subsequent section references are to the Internal 15 Revenue Code in effect for the year in issue and Rul e 16 references are to the Tax Court Rules of Practice and 17 Procedure . 18 By notice of deficiency dated September 27 , 19 2007, Respondent determined a deficiency in Petitioner's 2004 20 federal income tax return in the amount of $3491 . Respondent 21 disallowed certain claimed itemized deductions . In an amended 22 return submitted at about the time she filed her petitio n 23 herein, Petitioner conceded much of the initial claime d 24 itemized deductions . However, Petitioner claimed a deduction 25 for a casualty loss in the amount of $38,295, allegedly Heritage Reporting Corporatio n (202) 628-4888 4 1 incurred as a result of Hurricane Francis . On the amended 2 return, Petitioner also claimed miscellaneous itemized 3 deductions in the amount of $1147 .21 . In her petition, sh e 4 asserts that her casualty loss claim eliminates the deficiency 5 determined by Respondent . 6 The issues for decision are whether (1) 7 Petitioner is entitled to a deduction for miscellaneou s 8 itemized deductions in any amount ; and (2) whether she is 9 entitled to a casualty loss deduction . 10 Fact s 11 The Court finds the following facts, based upon 12 the stipulation of facts and attached exhibits filed by the 13 parties and the statement of Petitioner . At the time th e 14 petition was filed, Petitioner resided in Florida . 15 Petitioner purchaseea house in West Palm Beach, Pse 16 Florida for $99,000 in February 2003 . The house was sold in 17 November 2004 for approximately $225,000 . Hurricane Francis 18 hit Florida September 5, 2004 . Petitioner asserts that sh e 19 incurred expenses of $27,739 .80 for repair and improvements to 20 her home after the hurricane . No substantiation by way o f 21 receipts, invoices, canceled checks or credit card statements 22 was presented with respect to the claimed expenses . 23 Petitioner asserts that when she sold her home in November 24 2004, the house would have been worth, and would have sold 25 for, an amount in excess of $300,000 had it not been damage d Heritage Reporting Corporation (202) 628-4888 5 1 by the hurricane . Petitioner attached to the amended return a 2 Form 4684 (Casualties and Thefts) . On this form, she claimed 3 total casualty loss of $38,295 after deduction for insuranc e 4 reimbursement ($3000) and other adjustments including 10 5 percent adjusted gross income deduction . 6 As to the claimed itemized deductions , 7 Petitioner did not present any evidence that she is entitled 8 to claimed itemized deductions over and above the amoun t 9 allowed by Respondent . 10 Discussion 11 We begin by noting that the Commissioner' s 12 determinations are presumed correct . See Rule 142(a) ; Welch 13 v . Helvering , 290 U .S . 111, 115 (1933) . Deductions are a 14 matter of legislative grace, and taxpayers bear the burden of 15 proving that they are entitled to the claimed deduction . See 16 Rule 142(a) ; New Colonial Ice Co . v . Helvering, 292 U .S . 435, 17 440 (1934) . 18 As to the claimed itemized deductions, 19 Petitioner presented no evidence, either documents or 20 testimony to establish that she is entitled to itemized 21 deductions in an amount greater than that allowed b y 22 Respondent . Accordingly, Respondent's determination is 23 sustained as to the disallowed itemized deductions . 24 As to her claimed casualty loss, Petitioner 25 appears to proceed on two theories . On one theory, she Heritage Reporting Corporatio n (202) 628-4888 6 1 asserts that she incurred $29,274 .30 in expenses to repair her 2 house after damage caused by Hurricane Francis . Her secon d 3 theory is reflected on Form 4684 (Casualties and Thefts), 4 submitted with her amended 2004 federal income tax return . 5 Under this theory, Petitioner claims that the fair market 6 value of her house was $315,000 prior to the hurricane and 7 that after the casualty, the house was worth $270,000 . 8 Section 165(a) allows a deduction for "any loss 9 sustained during the taxable year and not compensated for by 10 insurance or otherwise ." Section 165(b) provides that th e 11 taxpayer's adjusted basis provided in Section 1011 for 12 determining the loss from if sale of property is used to PIP 13 determine the amount of the deduction for any loss . 14 Generally, no deduction is allowed on a loss incurred by a 15 taxpayer with respect to the sale of her principal residence . 16 See Section 165(c ) ; Section 1 . 165-9 ( a), Income Tax Regs . 17 However, Section 165(c) allows deductions for property lost to 18 storms , among other casualties . A loss of property resulting 19 from Hurricane Francis would satisfy Section 165(c) . 20 The cost of repairs is generally accepted as 21 evidence of the loss of value if a taxpayer shows that the 22 repairs were necessary to restore the property to the 23 condition immediately before the casualty . There are 24 additional requirements set forth in the regulations . Treas . 25 Reg . Section 1 .165-7 ( a)(2)(ii) . Heritage Reporting Corporation (202) 628-4888 7 1 While Petitioner submitted a typewritten lis t 2 of items of repairs totaling $29,274 .30, she presented no 3 specific testimony and no invoices or canceled checks t o 4 support the claimed amount for repairs . As such, we do not 5 accept this list as support for the claimed casualty los s 6 deduction . 7 We now consider Petitioner's second theory to 8 support the claimed casualty loss . Petitioner sold he r 9 property in November 2004 for substantially more than she paid 10 for it in February 2003 . She claims a casualty loss on th e 11 basis that the fair market value of the property before the 12 hurricane was greater than the value she realized when she 13 sold the property approximately two months after th e 14 hurricane . Petitioner has not demonstrated that she realized 15 any loss on this property ; to the contrary, the facts indicate 16 she realized a gain in excess of $100,000 . 17 At best, Petitioner had an expectancy that her 18 property would appreciate in value more than it actuall y 19 appreciated . However, the asserted $315,000 pre-storm fair 20 market value reported on Form 4684 appears speculative at 21 best . At any rate, this phantom loss is not the kind of 22 casualty loss for which a deduction is permitted under Section 23 165(c) . 24 The law does not allow a deduction for mer e 25 fluctuation in the value of property . Citizens Bank of Weston Heritage Reporting Corporatio n (202) 628-4888 8 1 v . Commissioner , 28 T .C . 717, 720 (1957) . 2 Respondent's determination is sustained, and a 3 decision will be entered for Respondent . 4 This concludes theAoral findings of fact and Covr~~ 5 p P 5 opinion in this case . 6 THE COURT : And that also concludes the session 7 here in Tampa . The Court will adjourn . 8 THE CLERK : All rise . 9 (Whereupon, at 11 :00 a .m ., the bench opinion in 10 the above-entitled matter was concluded . ) 11 12 13 14 15 16 / / 17 // 1 8 19 20 21 22 23 2 4 25 Heritage Reporting Corporation (202) 628-4888