Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 66-50

1966-1 C.B. 40

Sec. 165

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Rev. Rul. 66-50

The question has been raised as to the proper method  of computing the deductible casualty loss, under section 165(c)(3) of the Internal Revenue Code of 1954, where more than one item of nonbusiness personal property was lost or damaged in the casualty.

In the case of each casualty, the amount of loss to be taken into account is the lesser of either (1) an amount equal to the fair market value of the property immediately before the casualty reduced by the fair market value of the property immediately after the casualty or (2) the amount of the adjusted basis prescribed in section 1.1011-1 of the Income Tax Regulations for determining the loss from the sale or other disposition of the property involved.

Held , for purposes of determining a casualty loss with respect to nonbusiness personal property, the decrease in fair market value and the adjusted basis must be determined separately for each item claimed to have been lost or damaged in order to establish a separate loss for each item. These separate losses must then be combined to determine the amount of the deduction under section 165(c)(3) of the Code.