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reimbursement will be received. Sec. 1.165-1(d)(2)(i), Income
Tax Regs.14
Petitioner had a claim for reimbursement in this case. The
buildings were insured for replacement costs of up to $852,000
and petitioner had submitted a claim that was pending as of the
close of the taxable year at issue.15 Thus, we must decide
whether petitioner had a reasonable prospect of recovery.
Whether the taxpayer has a reasonable prospect of recovery is a
question of fact. Boehm v. Commissioner, 326 U.S. 287, 292-293
(1945); Estate of Wagner v. Commissioner, T.C. Memo. 1998-338.
We rely on objective facts primarily, but the taxpayer’s
14 Respondent disputes whether the roof collapse was a
casualty within the meaning of sec. 165, arguing that the
collapse resulted from the slow deterioration of the roof
trusses, and thus lacked the requisite suddenness to qualify as a
casualty. See Maher v. Commissioner, 76 T.C. 593 (1981), affd.
680 F.2d 91 (11th Cir. 1982). Neither party produced admissible
expert testimony on the cause of the collapse. Assuming arguendo
that the collapse constituted a casualty, it still must be shown
that there was no reasonable prospect of recovery during the year
in issue before petitioner would be entitled to the claimed
deduction. Because we hold that there was a reasonable prospect
of recovery during the year in issue, we need not, and do not,
decide whether the collapse was a casualty.
15 Although Julicher Sports, rather than petitioner, was the
named insured, petitioner does not argue that he had no claim for
reimbursement and therefore that he, as the only petitioner in
the instant case, should be entitled to a casualty loss
deduction. Indeed, petitioner owned the building and joined in
the lawsuit against Atlas. Moreover, Mr. Stewart, Atlas’s
attorney during the investigation of the claim, testified that
Atlas would have been “hard pressed” to deny coverage to
petitioner on the ground that he was not the named insured, since
his name was on the insurance policy in conjunction with the name
of Julicher Sports.
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