Blackman v. Commissioner case brief

Blackman v. Commissioner case brief summary
88 T.C. 677 (Tax Ct. 1987)

FACTS
-Blackman and his wife got into an argument.
-In a fit of anger, Blackman took all her clothes and burned them in righteous fire.
-The fire spewed out of control and burned down the house.
-Blackman somehow was not convicted of arson, however his insurance ardently refused to exhume money for the loss.
-When Blackman filed his taxes, he marked a deduction for a casualty loss for the damage which was caused to the home.
-The IRS denied the deduction.
-Blackman appealed.

RULES:
26 U.S.C. §165(c)(3) allows for deductions due to property losses, including losses from fires.
-You can claim a casualty loss deduction under §165(c)(3) even if you are negligent, but not if you are grossly negligent.

ARGUMENTS:
-Blackman argued that he had definitely lost property, so he should get the deduction.
-The IRS argued that the deduction is actually intended to cover unlucky people, not negligent people, so if you are partially at fault, you can not take the deduction.

HOLDING:
The Tax Court found for the IRS and denied the deduction.

ANALYSIS:
-Negligence of the taxpayer is not a bar to the allowance of the casualty loss deduction.
Also see: Anderson v. Commissioner (81 F.2d 457 (1936)) and Shearer v. Anderson (16 F.2d 995 (1927)).
However, the Court stated that gross negligence on the part of the taxpayer will bar a casualty loss deduction.  Heyn v. Commissioner (46 T.C. 302 (1966)).
-The Court found that Blackman's actions amounted to gross negligence and therefore didn't qualify for a deduction under rule §165(c)(3).
-The Court further found that allowing a casualty loss deduction in this case would severely and immediately frustrate the public policy against arson and burning, and against domestic violence.


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