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Moreover, the Court of Appeals for the Ninth Circuit, to
which appeal in the present case would normally lie, has adopted
this rule requiring physical damage. See, e.g., Kamanski v.
Commissioner, 477 F.2d at 452; Pulvers v. Commissioner, 407 F.2d
838, 839 (9th Cir. 1969), affg. 48 T.C. 245 (1967). In Pulvers
v. Commissioner, supra at 839, the Court of Appeals reviewed the
specific casualties enumerated in section 165(c)(3) and
concluded: “Each of those surely involves physical damage or
loss of the physical property. Thus, we read ‘or other
casualty,’ in para materia, meaning ‘something like those
specifically mentioned.’” Even more explicitly, the Court of
Appeals based affirmance in Kamanski v. Commissioner, supra at
452, on the following grounds:
The Tax Court ruled that the loss sustained was a
nondeductible personal loss in disposition of
residential property and not a casualty loss; that the
drop in market value was not due to physical damage
caused by the [earth]slide, but to “buyer resistance”;
that casualty loss is limited to damage directly caused
by the casualty. We agree.
Furthermore, two recent opinions from U.S. District Courts
within the Ninth Circuit, although nonbinding and not officially
reported, nonetheless serve as an indication that the Court of
Appeals has not rejected the physical damage requirement. In
Gordon v. United States, No. C-94-4210 MHP (N.D. Cal., July 3,
1995), affd. without published opinion 82 F.3d 422 (9th Cir.
1996), the District Court, citing the appellate decision in
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