TAX COURT OPINION

Case: Bruce & Norma McGraw
Docket Number: 22519-07
Judge: Thornton
Opinion Type: memo
Filed: 11/30/2009
Pages: 4

V\ T .C . Memo . 2009=275 UNITED STATES TAX COUR T BRUCE MCGRAW AND NORMA MCGRAW, Petitioners Y . COMMISSIONER OF INTERNAL REVENUE, Responden t Docket No . 22519-07 . Filed November 30, 2009 . Donna Rice Owens , for petitioners . Ladd C . Brown, Jr . , for respondent . MEMORANDUM FINDINGS OF FACT AND OPINIO N THORNTON , Judge : Respondent determined a $19,277 deficiency in petitioners ' 2005 Federal income tax and an accuracy -relate penalty of $ 3,650 pursuant to section 6662 ( a) .' Afte r 'Unless otherwise indicated, all section references are to the Internal Revenue Code as,in effect for the taxable year at issue . SERVED Nov 30 2009 2 - concessions, the only issue for decision is whether the casualty loss deduction petitioners claimed on their 2005 joint Federa l income tax return is subject to the limitations of section 165(h) .2 This issue turns upon whether the undisputed casualty loss of $69,715 that petitioners sustained in 2005 was attributable to Hurricane Wilma so as to qualify for relief under sections 14 .OOM(6) and 1400S(b), as enacted in the Gulf Opportunity Zone Act of 2005 (the GO Zone Act), Pub . L . 109-135, secs . 101(a), 201(a), 119 Stat . 2578, 2596 . FINDINGS OF FAC T The parties have stipulated some facts, which we so find . When they filed their petition, petitioners resided in Florida . Petitioners' . home is in Broward County, Florida, and withi n the Hurricane Wilma disaster area as defined in the GO Zone Ac t and declared by the President . . Sec . 1400M(6) ; Notice of Presidential Declaration, 70_Fed . Reg . 67187 (Nov . 4, 2005) . their 2005 joint Form 1040, U .S . Individual Income Tax Return, petitioners claimed a $69,715, casualty loss, which they contend resulted from damage to their home caused by Hurricane Wilma . 2In their stipulation of settled issues, the parties agree that if'the Court rules in petitioners' favor on the casualty issue, then their deficiency in income-tax for 2005 is $4,966 and there is no penalty pursuant to sec . 6662(a) . 3 In the notice of deficiency, respondent decrease d petitioners' casualty loss deduction to $27,622 on the ground that .section 165(h) limited the amount allowed as a deduction . OPINION Section 165(a) allows a deduction for-losses sustained during the taxable year and not compensated for by insurance or otherwise . In the case of an . individual, 'the deduction is limited to certain losses, including those arising .from a casualty . Sec . 165(c)(3) . Under the'general rule of section 165 ' 1 (h), a casualty loss .may .be deducted only to the extent it exceeds $100 and 10 perce ht 1 of the taxpayer's adjusted gross income (after applying the $10 1 floor) . These limitations do not apply to casualty losses "which arise in the Hurricane Wilma disaster area on or after October 23, 2005, and which are attributable to Hurricane Wilma ." Sec . 1400S(b) (3) . The parties have stipulated that petitioners' home is located in the Hurricane Wilma disaster area . Respondent does not dispute that on or after October 23, 2005, petitioners sustained an uncompensated casualty loss of $69,217, as claimed on their 2005 return . Respondent disputes only whether the casualty loss'was attributable to Hurricane Wilma . Petitioners were not present at trial, but one of their ,longtime friends, who lives a short distance from them in Browald County, testified on their behalf . He testified that he had been at petitioners' home watching football the day,before Hurrican e Wilma and observed no damage to their property . He testified that when he returned to their home a week later to help them clean up, he observed . extensive damage to their property and to other properties in their gated community, although the guard, gate was no longer . there . We found the witness and his',unrefuted testimony credible . Sparse as it may be, the totality of the evidence fairly supports the inference that petitioners' undisputed casualty loss was attributable to Hurricane Wilma, and we so find . Accordingly, we conclude and hold that the section 165(h) limitations do not apply to petitioners' casualty loss deduction . To reflect our resolution of the disputed issue and the parties' stipulation of settled issues, Decision will be entere d for petitioners .