Category: Estates & Trusts: Income Tax;
Deductions & Credits
Subject: Losses
Title: Casualty Loss: Election to Deduct Loss in Preceeding Year,
Availability for Trusts
IRC Sections: 165(i)
Filename: 1288.html
Date Produced: 11/95 Copyright 1998, The Tax Resource Group. All rights reserved.
Telephone 800-578-3498. Internet: www.taxresourcegroup.com Background
Taxpayer (TP) is a complex trust which owns a stand of timber
damaged in a presidentially declared disaster area. There was
a measurable decline as between the value of the standing timber
and that of the knocked-down timber. Section 165(i) allows an
election to deduct certain casualty losses in the year immediately
preceding the actual loss. Issue
Is the election under Section 165(i) available to TP, a trust,
or is the election only available to individuals? Answer
The election under Section 165(i) is available to all taxpayers. Discussion
Section 165(i) and the regulations thereunder (Reg. Sec. 1.165-11)
do not place any explicit restrictions on the type of taxpayer
to which the election applies. The statute is absolutely silent
on the issue. The regulations couch the discussion of the election
in terms of "a taxpayer". Under Section 7701(a)(14),
the term "taxpayer" means any "person" subject
to any internal revenue tax. Under Section 7701(a)(1) the term
"person" includes an individual, a trust, estate, partnership,
association, company, or corporation. The foregoing stands as
very strong evidence that the rules of Section 165(i) are available
to all taxpayers. I am unable to locate a case or ruling in which the type of
taxpayer is at issue with respect to an election under Section
165(i). There is one letter ruling, Letter Ruling 9218022, in
which a corporation requested a ruling on a peripheral issue under
Section 165(i). While it is clear that private rulings cannot
be cited as precedent, the existence of this ruling provides an
additional measure of comfort that the election under Section
165(i) is available to non-individual taxpayers. | 
