- 11 -
their cost of restoring the pond because heavy snows in the
winter of 1990-91 that caused the cedar trees to fall into and
damage the pond were sudden, unexpected, and unusual. We
disagree.
An individual may deduct losses arising "from fire, storm,
shipwreck, or other casualty, or from theft." Sec. 165(c)(3);
Durden v. Commissioner, 3 T.C. 1, 3 (1944). A casualty does not
include the "progressive deterioration of property through a
steadily operating cause." Fay v. Commissioner, 120 F.2d 253,
253 (2d Cir. 1941), affg. per curiam 42 B.T.A. 206 (1940); Durden
v. Commissioner, supra.
Petitioners contend that the trees fell into their pond from
1991 to 1994 sufficiently suddenly to constitute a casualty loss.
Petitioners cite Bailey v. Commissioner, T.C. Memo. 1983-685, and
Helstoski v. Commissioner, T.C. Memo. 1990-382, to support their
claim that the deterioration of their pond was not from gradual
erosion but was due to a sudden event. Bailey and Helstoski are
distinguishable from this case. In Bailey, large portions of the
taxpayers’ backyard fell away in 6 to 8 weeks, exposing the
foundation of their house. We held that the soil slippage
occurred quickly enough to be a casualty within the meaning of
section 165(a). Similarly, in Helstoski, we treated as a
casualty loss storm damage to the taxpayers’ pond which
immediately reduced the value of the taxpayers’ property. In
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011