Pulvers v. Commissioner
407 F.2d 838 (9th Cir. 1969)
Pulvers owned a home near a
mountain. A landslide ruined three of his neighbors' homes, but did no
damage to Pulvers' home.
Pulvers noted that the resale
value of his home decreased because no one was willing to buy a house that
was in a landslide zone. When he filed his taxes, he claimed a deduction
on the loss of value of his home as a casualty loss.
The IRS denied the deduction.
The Tax Court affirmed,
The Tax Court found that
Pulvers had not incurred an actual loss, he only suffered a hypothetical
loss or a mere fluctuation in value.
The Appellate Court affirmed.
The Appellate Court looked
to 26 U.S.C. §165(c)(3), which
lays out the specific kinds of losses that are deductible, and found that
it lists a number of specific losses like fire and theft, and also
included a clause for "other casualty."
The Court used the canon of
in para materia and found that
"other casualty" meant things that caused a similar type of
physical damage loss (such as earthquakes), and should not be read to
include hypothetical losses such as Pulvers was claiming to have
Pulvers argued that the
landslide was caused by a storm, and storms are included under §165(c)(3), but the Court disagreed.
The Court found that
Pulvers' property had not been damaged by the storm, or anything else, so
he gets no deduction.