- 27 - made any capital expenditure in connection with the Foxbriar swimming pool prior to 1994. Petitioners rely on Rev. Rul. 73-41, 1973-1 C.B. 74, for the proposition that casualty loss deductions can be allowed to mere lessees. Petitioners’ reliance on this revenue ruling is misplaced. The taxpayer in the cited revenue ruling was a lessee of residential property who, under the terms of the lease, was required to surrender the property in good condition at the termination of the lease. A fire severely damaged much of the property just prior to the lease expiration, and the taxpayer failed to surrender the property in good condition. The taxpayer denied liability for the damage, and the lessor sued. A judgment was rendered against the taxpayer. The ruling held that the "loss sustained upon payment of the judgment was directly attributable to the fire", and, thus, the taxpayer was entitled to a casualty loss deduction with respect thereto. Petitioners in the instant case were not required, under their contract with the Hewitts, to repair the damage to the swimming pool and had no judgment rendered against them with respect to the swimming pool damage, an element which appears to have been essential in the revenue ruling. Moreover, it is well established that "the authoritative sources of Federal tax law are in the statutes, regulations, and judicial decisions and not in * * * informal [IRS] publications." Zimmerman v. Commissioner, 71 T.C. 367, 371 (1978), affd. without publishedPage: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Next
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