Dudley Joseph and Myrna Dupuy Callahan - Page 13

                                       - 13 -                                         
          the termite infestation.  Respondent disallowed petitioners'                
          claimed casualty losses on the grounds that the cost of repairing           
          termite damage is not a casualty loss and for lack of                       
          substantiation.                                                             
               Section 165(a) allows a deduction for losses sustained                 
          during the taxable year and not compensated for by insurance or             
          otherwise.  In the case of individuals, deductible losses are               
          limited to losses incurred in a trade or business or a                      
          transaction entered into for profit, and losses resulting from              
          "fire, storm, shipwreck, or other casualty, or from theft."  Sec.           
          165(c).  An "other casualty" has been defined by the courts to              
          mean a loss proximately caused by a sudden, unexpected, or                  
          unusual event, excluding progressive deterioration.  Maher v.               
          Commissioner, 680 F.2d 91, 92 (11th Cir. 1982), affg. 76 T.C. 593           
          (1981); Fay v. Helvering, 120 F.2d 253 (2d Cir. 1941), affg. 42             
          B.T.A. 206 (1940); White v. Commissioner, 48 T.C. 430, 435                  
          (1967).  Casualty losses for individuals are deductible only to             
          the extent that the loss exceeds $100 per casualty and 10 percent           
          of adjusted gross income (AGI).  Sec. 165(h).                               
               An individual's casualty loss is "treated as sustained                 
          during the taxable year in which the loss occurs as evidenced by            
          closed and completed transactions and as fixed by identifiable              
          events occurring in such taxable year."  Sec. 1.165-1(d)(1),                
          Income Tax Regs.  The amount of a casualty loss is generally                
          computed as the fair market value of the property immediately               




Page:  Previous  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next

Last modified: May 25, 2011