- 18 -
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...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011