casualty loss deduction ' the

casualty loss deduction ' the burden of proof is on the taxpayer to show (1) he was the owner of the property at the time of'the loss; (2)'the loss was sustained as a result of a casualty; (3)'the cost or adjusted basis of the property; (4)'the fair market value of ' the property immediately before and after the casualty; (5)'the amount of insurance proceeds or other compensation or reimbursement received or recoverable or'that no claim for reimbursement or compensation can be made.

The term “casualty” includes hurricanes, tornados, floods, storms, ' shipwrecks, fires or accidents for purposes of Section 165. The casualty must be the direct cause of actual physical damage to' the property in order to be deductible.

For example, no deduction is allowed for "economic damage" to a property’s value following a flood due to prospective buyer’s resistance to purchasing ' the property based upon knowledge' that the property is subject to flood damages.

In the event of a partial loss, it must be emphasized that' the measure of damages is not' the repair cost, but rather the difference in fair market value immediately before and after the casualty. This amount must be determined by a competent appraisal.

In some cases, the repair cost may be regarded as acceptable evidence of ' the decline in value if 'the following conditions are met: (1) the repairs are necessary to restore the property to its pre-casualty condition; (2) the amount spent on repairs is not “excessive;” (3) the repairs do not cover more than the damage suffered from' the casualty; and (4) the value of' the property after the repairs is not greater than its value before the casualty.

Similarly the cost of removal of debris may be considered a measure of damages to'the property for which a casualty loss is allowable.