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destruction of beautiful, picturesque sand dunes with sea oats
adversely affected the beauty of the beach and hampered the
enjoyment of leisure and recreation activities on the beach.
Respondent submitted no evidence to refute these claims.
However, we reject petitioners’ casualty loss claim for
Baldwin County’s change of the coastal construction setback line
after Hurricane Georges, which limited the area of the beach lot
available for construction of a new beach house. Any reduction
in value of the beach lot owing to the Baldwin County government
restriction was not a casualty loss because the proximate cause
of the loss was the government restriction rather than Hurricane
Georges itself. See Kemper v. Commissioner, supra. Moreover,
the government restriction does not constitute a casualty as
defined under section 165(c)(3) or “other casualty” as defined in
Maher v. Commissioner, supra, and Coleman v. Commissioner, supra.
With respect to the Atmore residence, unlike the beach lot,
petitioners failed to introduce sufficiently credible evidence
that the 1997 earthquakes or Hurricane Georges caused damages to
the Atmore residence that were not covered by insurance.
Although petitioners introduced photographic evidence to
establish the crack or cracks in the floors of two rooms on the
ground floor of the house, petitioners did not present any expert
opinion or other independent evidence that the seismic activity
was the cause of the crack or cracks in the floors. Petitioners
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