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Pulvers v. Commissioner

    Brief Fact Summary. A nearby landslide ruined three homes nearby, but did not do any damage to the property of Taxpayers. Taxpayers took an “other casualty loss” deduction for the loss of value because of a common fear that the future landslides might take their residence at some point in the future as well.

    Synopsis of Rule of Law. A fluctuation in value does not count as an “other casualty loss” subject to a deduction when there has been no physical damage.

    Facts. A nearby landslide ruined three homes nearby, but did not do any damage to the property of Taxpayers. Taxpayers took an “other casualty loss” deduction for the loss of value because of a common fear that the future landslides might take their residence at some point in the future as well.

    Issue. May Taxpayers take a deduction for “other casualty loss” for the loss of value in their home when there has been no physical damage?

    Held. Circuit Judge Chambers issued the opinion for the United States Ninth Court of Appeals in affirming the Tax Court and holding that Taxpayers may not take the deduction.

    Discussion. The Court of Appeals found that while the value did indeed lower because of the landslide, that Congress did not intend such a fluctuation in value to be deductible. Rather, there could be numerous instances where a house value is lowered without physical damage and a deduction should not be warranted.



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