James Lewis and Lilian E. Hunter - Page 5

                                        - 5 -                                         
          serving and uncorroborated testimony in this regard.  See Geiger            
          v. Commissioner, 440 F.2d 688, 689-690 (9th Cir. 1971), affg. per           
          curiam T.C. Memo. 1969-159; Tokarski v. Commissioner, 87 T.C. 74,           
          77 (1986).  Accordingly, we sustain respondent’s determination.             
          Casualty Loss Deduction                                                     
               Pursuant to section 165(a) and (c)(3), a taxpayer is allowed           
          a deduction for an uncompensated loss that arises from fire,                
          storm, shipwreck, or other casualty.  The loss must arise from an           
          event that is identifiable, damaging to property, sudden,                   
          unexpected, and unusual in nature.  See White v. Commissioner, 48           
          T.C. 430, 433 (1967); Kielts v. Commissioner, T.C. Memo. 1981-              
          329.  Generally, a casualty loss is deducted in the year the loss           
          is sustained.  See sec. 165(a); Hunter v. Commissioner, 46 T.C.             
          477, 492 (1966); Allen v. Commissioner, T.C. Memo. 1984-630;                
          secs. 1.165-1(d)(1), 1.165-7(a)(1), Income Tax Regs.  In                    
          circumstances where the full extent of the loss is not known, the           
          deduction can be claimed in a subsequent year.  See Kunsman v.              
          Commissioner, 49 T.C. 62, 72 (1967); Allen v. Commissioner,                 
          supra.  However, one’s entitlement to a casualty loss deduction             
          cannot be postponed beyond the year in which the full extent of             
          the loss is known.  See Kunsman v. Commissioner, supra at 72;               
          Katz v. Commissioner, T.C. Memo. 1983-8.                                    
               Respondent disallowed petitioners’ casualty loss deduction             
          on the basis that petitioners had failed to establish:  (1) The             

Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011