Willamette Industries, Inc. - Page 18




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               Finally, respondent contends that section 1033 was intended            
          to provide relief for taxpayers who experience “destruction [of             
          property] in whole or in part”.  Although respondent agrees that            
          petitioner had a casualty, damage to the trees, and petitioner              
          was compelled to salvage them, respondent infers that                       
          petitioner’s situation is somehow not directly affected by the              
          destruction.  Respondent contends that petitioner’s gain is                 
          voluntary or not caused by the damage because petitioner is able            
          to process the logs into finished products.                                 
               Admittedly, petitioner’s circumstances may appear more                 
          favorable than might have been expected after a “casualty”, but             
          the statute does not have a quantitative threshold.  Petitioner             
          is not seeking a windfall in the form of the deferral of gain               
          from processing and/or making the finished products.  Nor is                
          petitioner attempting to “utilize the involuntary interruption in           
          the continuity of his investment to alter the nature of that                
          investment tax free.”  Filippini v. United States, 318 F.2d at              
          844.  Petitioner is seeking to defer the unexpected gain that               
          resided in trees that it had not, at the time of the damage,                
          intended to harvest and to reinvest that gain in trees that will            
          fulfill petitioner’s intended purpose.13  Such deferral was the             


               13 Contrary to the import of respondent’s argument,                    
          petitioner did not intend to harvest trees that happen to become            
          diseased or damaged.  Petitioner intended to efficiently and                
                                                             (continued...)           






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