Corbaley v. Commissioner
United States Tax Court
T.C. Memo. 1984-201 (1984)
Facts
In April 1978, Richard Corbaley (plaintiff) purchased a used airplane for $6,200. The airplane contained a replacement engine of unknown age. In July 1978, Corbaley was flying the plane when the plane’s engine unexpectedly failed. Upon inspection, Corbaley determined that the engine failure was caused by extensive wear throughout the engine. In 1979 Corbaley purchased a new engine for $3,600. On his income-tax return for 1978, Corbaley included a $4,345 deduction for the cost of the plane’s failed engine. Corbaley argued that the deduction fell under § 165(c)(3) of the Internal Revenue Code, which allows taxpayers to take deductions for casualty losses. The Commissioner of Internal Revenue (the Commissioner) (defendant) disallowed the deduction, determining that Corbaley’s loss was not a casualty loss within the statutory definition. Corbaley petitioned the United States Tax Court for a redetermination.
Rule of Law
Issue
Holding and Reasoning (Featherston, J.)
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