Harold A. Johnson - Page 10
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Equally unpersuasive is any contention that the foreclosure
of the Merritt Island property constitutes a casualty loss within
the meaning of section 165(c)(3). A casualty loss is limited to
a loss caused by some sudden, unexpected, and external force such
as fire, storm, shipwreck or similar event or accident. See
White v. Commissioner, 48 T.C. 430 (1967). Petitioner’s loss of
the Merritt Island property by foreclosure was not caused by any
sudden, unexpected, or external force, but rather by his failure
to properly make payments on his mortgage loan. See Washington
v. Commissioner, supra.
Respondent’s disallowance of the deduction in question might
also be sustained for any number of other reasons, among them the
The sale of mortgaged property at a foreclosure sale is
treated as a sale or exchange from which the mortgagor may
realize gain or loss under section 1001. See Helvering v.
Hammel, 311 U.S. 504 (1941). In the present case, the facts
suggest that there may have been a gain on the foreclosure, and
not a loss, because the Merritt Island property was sold for an
amount greater than its original cost.10 See Emmons v.
dismissal in an unpublished opinion. See No. 00-14389-HH; see
also Siegel v. LePore, 234 F.3d 1163, 1172 (11th Cir. 2000).
10 There is no persuasive evidence in the record regarding
the cost of any improvements that petitioner might have made to
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