Court Opinion

ID: 4630754
Source: CourtListenerOpinion
Date Created: 2020-11-21 03:08:09.483447+00
Date Added: 2024-06-11T07:57:36.537163
License: Public Domain

Estate of William L. Schultz, Deceased, George L. Schultz, Executor v. Commissioner.Estate of William L. Schultz v. CommissionerDocket No. 26603.United States Tax Court1951 Tax Ct. Memo LEXIS 44; 10 T.C.M. (CCH) 1086; T.C.M. (RIA) 51329; November 13, 1951*44  Amount of casualty loss suffered as a result of a hurricane, determined.  Allen G. Gartner, Esq., and Edward I. Sproull, C.P.A., 17 E. 42nd St., New York, N. Y., for the petitioner. Thomas C. Cravens, Esq., for the respondent.  ARUNDELLMemorandum Findings of Fact and Opinion The respondent has determined a deficiency of $23,943.13 in the decedent's income tax for the taxable year 1944. The deficiency resulted from respondent's partial disallowance of a casualty loss deduction claimed by the decedent. Decedent died after having filed the petition and his estate has been substituted as the petitioner. Findings of Fact The petitioner's decedent, William L. Schultz, formerly resided in New Vernon, New Jersey. The decedent filed his 1944 income tax return with the Collector of Internal Revenue for the Fifth District of New Jersey. On March 8, 1944, the decedent purchased a furnished residential estate in Palm Beach, Florida, for $107,500. The property is located on the ocean front approximately one-half mile from the center of Palm Beach in a neighborhood where construction is limited by zoning laws to single residences. The main dwelling unit is located*45  at the corner of South Ocean Boulevard on the east and Via del Mar on the north. It has a frontage of 300 feet on Via del Mar and 150 feet on South Ocean Boulevard overlooking the Atlantic Ocean. The main residence is a 2-story Mediterranean type house built in 1928 of hollow tile with a tile roof. It is entered through a large hall with a large enclosed patio with cloisters on two sides. The living room is approximately 40 to 45 feet in length. It has seven bedrooms and six master baths, powder room, men's room, library and a third floor observation tower which provides a view of the ocean. It was equipped with a central heating plant. There is a separate building housing a garage for three cars with servants' quarters above. The grounds were appropriately landscaped. In addition to the main dwelling unit, there is an area of land, hereinafter referred to as the beach area, 150 feet long, east of South Ocean Boulevard extending to the beach waters of the ocean. In this area there is a salt-water swimming pool, a dining cloister or loggia, bath houses, kitchen, and a pump-house. This area is reached by a tunnel under South Ocean Boulevard, extending from the main dwelling unit, *46  and is entirely enclosed inside a private wall. The part of the beach area facing the ocean was protected by a bulkhead or sea wall, 18 feet above sea level, extending the full width of the property. This bulkhead is part of a continuing bulkhead extending over the entire ocean front area of Palm Beach. It was built by the City of Palm Beach in 1928 under a publicly financed general bond issue. The maintenance and repair of the bulkhead was the responsibility of the individuals owning property along which the bulkhead ran. In 1935, a groin (a wall similar to a jetty), extending approximately 175 feet from and running at a right angle to the bulkhead was constructed. It was constructed of steel and concrete and rose to an elevation of approximately seven feet above mean low tide. This groin provided additional protection against the ocean and enhanced the shore in front of decedent's beach area by causing an accretion of sand to be stored there. It was constructed under private contract and was part of the property purchased by decedent. On October 18 and 19, 1944, hurricane struck Palm Beach and damaged decedent's property. Most of the groin was either entirely destroyed or damaged*47  beyond repair. The bulkhead was seriously unbalanced and required major repairs. The bulkhead and groin were repaired in 1947 at a total cost of $11,135. The walls and bottom of the swimming pool were cracked and some of the flagstones were displaced. The bath houses were filled with sand and the pump-house was inundated. The ladder-like stairway leading to the beach from the top of the bulkhead was entirely destroyed and the concrete footings attached to it were torn out. The tunnel under Ocean Boulevard was full of sand. The main residence was only slightly damaged; some tile was blown off the roof, and the grounds were strewn with fallen trees and limbs. In 1944, petitioner's decedent suffered a casualty loss in the amount of $20,000 as a result of a hurricane which struck Palm Beach, Florida, in October of that year, and no part of this loss was compensated for by insurance or otherwise. Opinion ARUNDELL, Judge: The parties agree that petitioner's decedent suffered a casualty loss within the meaning of section 23 (e) (3) of the Internal Revenue Code when a hurricane struck his estate in Palm Beach, Florida, in October, 1944. The only question left*48  to the Court for decision is the extent of the loss.  After careful consideration of the entire record, including the testimony of several experts, we have concluded that petitioner's decedent suffered a deductible loss in the amount of $20,000. Decision will be entered under Rule 50.