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Respondent determined a deficiency in petitioner’s Federal
income tax of $2,745 for the taxable year 2001.
The issue for decision is whether petitioner is entitled to
a casualty loss deduction of $19,068 for damage to her personal
property and residence due to a flood.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by this reference. Petitioner resided in
Chicago, Illinois, on the date the petition was filed in this
case.
During 2001, petitioner resided in a single-family home,
consisting of a first floor and a full basement, in Chicago,
Illinois. On or about August 2, 2001, a severe 3-hour
thunderstorm dumped up to 4 inches of rain on a 30-mile corridor
from Lake County, south through Cook County, and on to Kankakee.
The flash flooding caused by the thunderstorm damaged thousands
of homes. Governor George Ryan declared the area a State
disaster area. Damage from the torrential rain shut down
expressways and Chicago Transit Authority trains. The resulting
runoff overwhelmed the city’s combined storm and sewer systems,
causing sewer backup flooding.
Petitioner returned home on August 2, 2001, to discover that
her basement had flooded. Petitioner had insurance which,
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