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Petitioners failed to introduce sufficiently credible
evidence as to the requisite elements of a casualty loss
deduction to shift the burden of proof to respondent.
2. Applicable Law
Section 165(a) and (c)(3) allows an individual a deduction
for loss of property not connected with a trade or business or a
transaction entered into for profit if the loss arises from fire,
storm, shipwreck, or other casualty and was not compensated for
by insurance or otherwise. “Other casualty” is defined as a loss
proximately caused by a sudden, unexpected, or unusual event,
excluding the progressive deterioration of property through a
steadily operating cause or by normal depreciation. Maher v.
Commissioner, 680 F.2d 91, 92 (11th Cir. 1982), affg. 76 T.C. 593
(1981); Coleman v. Commissioner, 76 T.C. 580, 589 (1981). There
must be a causal connection between the alleged casualty and the
loss claimed by the taxpayer. Kemper v. Commissioner, 30 T.C.
546, 549-50 (1958), affd. 269 F.2d 184 (8th Cir. 1959). The
casualty loss must be permanent and not merely temporary damage
or interruption in the use of the property. Bidelspacher v.
Commissioner, T.C. Memo. 1980-538, affd. without published
opinion 681 F.2d 804 (3d Cir. 1982).
A casualty loss not connected with a trade or business or a
transaction entered into for profit is deductible under section
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