                        T.C. Memo. 2009-275



                     UNITED STATES TAX COURT



          BRUCE MCGRAW AND NORMA MCGRAW, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 22519-07.              Filed November 30, 2009.



     Donna Rice Owens, for petitioners.

     Ladd C. Brown, Jr., for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     THORNTON, Judge:   Respondent determined a $19,277 deficiency

in petitioners’ 2005 Federal income tax and an accuracy-related

penalty of $3,650 pursuant to section 6662(a).1   After



     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as in effect for the taxable year at
issue.
                                 - 2 -

concessions, the only issue for decision is whether the casualty

loss deduction petitioners claimed on their 2005 joint Federal

income tax return is subject to the limitations of section

165(h).2   This issue turns upon whether the undisputed casualty

loss of $69,715 that petitioners sustained in 2005 was

attributable to Hurricane Wilma so as to qualify for relief under

sections 1400M(6) and 1400S(b), as enacted in the Gulf

Opportunity Zone Act of 2005 (the GO Zone Act), Pub. L. 109-135,

secs. 101(a), 201(a), 119 Stat. 2578, 2596.

                         FINDINGS OF FACT

     The parties have stipulated some facts, which we so find.

When they filed their petition, petitioners resided in Florida.

     Petitioners’ home is in Broward County, Florida, and within

the Hurricane Wilma disaster area as defined in the GO Zone Act

and declared by the President.    Sec. 1400M(6); Notice of

Presidential Declaration, 70 Fed. Reg. 67187 (Nov. 4, 2005).    On

their 2005 joint Form 1040, U.S. Individual Income Tax Return,

petitioners claimed a $69,715 casualty loss, which they contend

resulted from damage to their home caused by Hurricane Wilma.




     2
      In their stipulation of settled issues, the parties agree
that if the Court rules in petitioners’ favor on the casualty
issue, then their deficiency in income tax for 2005 is $4,966 and
there is no penalty pursuant to sec. 6662(a).
                                - 3 -

     In the notice of deficiency, respondent decreased

petitioners’ casualty loss deduction to $27,622 on the ground

that section 165(h) limited the amount allowed as a deduction.

                               OPINION

     Section 165(a) allows a deduction for losses sustained

during the taxable year and not compensated for by insurance or

otherwise.    In the case of an individual, the deduction is

limited to certain losses, including those arising from a

casualty.    Sec. 165(c)(3).

     Under the general rule of section 165(h), a casualty loss

may be deducted only to the extent it exceeds $100 and 10 percent

of the taxpayer’s adjusted gross income (after applying the $100

floor).   These limitations do not apply to casualty losses “which

arise in the Hurricane Wilma disaster area on or after October

23, 2005, and which are attributable to Hurricane Wilma.”      Sec.

1400S(b)(3).

     The parties have stipulated that petitioners’ home is

located in the Hurricane Wilma disaster area.    Respondent does

not dispute that on or after October 23, 2005, petitioners

sustained an uncompensated casualty loss of $69,217, as claimed

on their 2005 return.    Respondent disputes only whether the

casualty loss was attributable to Hurricane Wilma.

     Petitioners were not present at trial, but one of their

longtime friends, who lives a short distance from them in Broward
                              - 4 -

County, testified on their behalf.    He testified that he had been

at petitioners’ home watching football the day before Hurricane

Wilma and observed no damage to their property.    He testified

that when he returned to their home a week later to help them

clean up, he observed extensive damage to their property and to

other properties in their gated community, although the guard

gate was no longer there.

     We found the witness and his unrefuted testimony credible.

Sparse as it may be, the totality of the evidence fairly supports

the inference that petitioners’ undisputed casualty loss was

attributable to Hurricane Wilma, and we so find.    Accordingly, we

conclude and hold that the section 165(h) limitations do not

apply to petitioners’ casualty loss deduction.

     To reflect our resolution of the disputed issue and the

parties’ stipulation of settled issues,


                                           Decision will be entered

                                      for petitioners.
