Austin Clapp, Gloria Clapp, Stuart P. Clapp, and Virginia M. Clapp v. Commissioner of Internal Revenue

This matter is before us on a petition to review a decision of the Tax Court redetermining petitioners’ asserted federal income tax deficiency for the year 1955. The Tax Court decision is reported in 36 T.C. 905 .

Petitioners operated a recreation park with facilities for swimming, boating and picnicking. Members of the public were permitted to utilize these facilities upon the payment of a fee for admission to the park.

Included within the boundaries of the park was a lakeshore. In its natural state, the lakeshore did not contain any sand. In order to make an attractive beach for swimming and sunbathing purposes, petitioners’ predecessor as operator of the park had purchased large quantities of sand and had spread it over a part of the shore area.

An unprecedented amount of rain fell during the month of December, 1955, and washed approximately ninety-eight percent of the sand into the lake. Petitioners claimed the loss as a deduction from gross income, pursuant to section 165(a) (b) and (c) (1) of the Internal Revenue Code of 1954.

The Commissioner disallowed the claimed loss and assessed a tax deficiency for the year in which it had been claimed. The petitioners asked the…