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is an inherent prerequisite in showing a casualty loss.” When
again faced with taxpayers seeking a deduction premised upon a
decrease in market value, the Court further explained in Pulvers
v. Commissioner, supra at 249 (quoting Citizens Bank v.
Commissioner, 252 F.2d at 428): “‘The scheme of our tax laws
does not, however, contemplate such a series of adjustments to
reflect the vicissitudes of the market, or the wavering values
occasioned by a succession of adverse or favorable
developments.’” Such a decline was termed “a hypothetical loss
or a mere fluctuation in value.” Id. at 250. The Court likewise
emphasized in Squirt Co. v. Commissioner, supra at 547, that “Not
all reductions in market value resulting from casualty-type
occurrences are deductible under section 165; only those losses
are deductible which are the result of actual physical damage to
the property.” This rule was reiterated yet again in Kamanski v.
Commissioner, supra, when the Court observed:
In the instant case there was likewise relatively
small physical damage to petitioner’s property and the
primary drop in value was due to buyer resistance to
purchasing property in an area which had suffered a
landslide. If there had been no physical damage to the
property, petitioner would be entitled to no casualty
loss deduction because of the decrease in market value
resulting from the slide. * * *
* * * * * * *
* * * the only loss which petitioner is
entitled to deduct is for the physical damage to
his property
* * *
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