“Other casualty” are events similar to “fire, storm, or shipwreck.” It is generally held that wherever force is applied to property which the owner-taxpayer is either unaware of because of the hidden nature of such application or is powerless to act to prevent the same because of the suddenness thereof or some other disability and damage results.
In addition, the deduction is limited to those losses sustained during the taxable year and not compensated by insurance, or otherwise.
While fire, storm, and shipwreck are recognizable and fairly definable, determining what constitutes “other casualty” is less sure.
In this case, the taxpayer owned a residential lot upon which 40 ornamental pine trees grew.
In Carpenter v. Commissioner, the taxpayer accidentally dropped a diamond ring down the garbage disposal.
The United States Tax Court ruled that the accidental destruction of the diamond ring was a casualty loss and, therefore, deductible.
[3] After hearing the taxpayer testify to the surrounding facts and circumstances, the court determined that the dropping of the ring down the garbage disposal was “inadvertent and accidental.” The “damage to the ring resulted from the destructive force of the disposal coupled with the accident or mischance of placing it therein; that, because this is so, the damage must be said to have arisen from fortuitous events over which the petitioners had no control.” Although the ring was damaged partly because the taxpayer dropped the ring it was still a casualty loss because the taxpayer had no control over the garbage disposal damaging the ring; just as a taxpayer does not have control over fire, storm, or shipwreck so too did the taxpayer not have control over the garbage disposal at that specific point in time.