J. G. Boswell Company and J. G. Boswell Company (Successor by Merger to Tulare Lake Land Company) v. Commissioner of Internal Revenue

In the spring of 1952, the Tulare Lake Basin was inundated by a snow-melt runoff flood. Petitioner claimed that it had sustained a loss in the amount of $1,695,-619.06 by reason of this flood upon its land. In 1956, the Commissioner of Internal Revenue disallowed the loss deduction claimed, and assessed deficiencies accordingly. Petitioner sought relief in the Tax Court, which held that petitioner was not entitled to deduct the alleged loss and confirmed the deficiencies asserted by the Commissioner.

This is a petition to review the Tax Court decision. 34 T.C. 539 (1960). The fundamental question presented is whether, as a result of the flood, the petitioner, J. G. Boswell Company, has sustained a loss within the meaning of Section 23(f) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 23 (f), during the fiscal years ended June 30, 1952 and March 31, 1953.

Petitioner measures the claimed loss as being the alleged difference between the estimated fair market value of the land before the flood and the estimated value on June 30, 1952, when the flood-waters stood at their greatest depth on the land. The amounts claimed in petitioner’s returns are either these alleged differences…