DocketNumber: No. 14109-08S
Citation Numbers: 2009 T.C. Summary Opinion 190, 2009 Tax Ct. Summary LEXIS 189
Judges: Gerber,Joel
Filed Date: 12/10/2009
Status: Non-Precedential
Modified Date: 11/20/2020
PURSUANT TO
GERBER,
For petitioner's 2005 tax year respondent determined a $ 6,230 income tax deficiency and a $ 1,246 accuracy-related penalty under section 6662(a). The issues for our consideration are: (1) Whether petitioner is entitled to a casualty loss deduction for 2005; and (2) whether petitioner is liable for the section 6662(a) accuracy-related penalty.
Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioner resided in California when his petition was filed.
On August 12, 2005, petitioner purchased a 2006 Ford F-350 pickup truck for $ 40,210.65. *190 On October 28, 2005, petitioner attended a gathering at a friend's house. Anticipating that he would be drinking alcohol, he arranged for transportation to and from his home. After returning home petitioner decided to drive to his parents' house. On the way there he failed to successfully negotiate a turn, and his truck slid off an embankment. The truck rolled over and was severely damaged. Because his blood-alcohol level was 0.09 percent, he was cited and arrested for driving under the influence of alcohol (DUI). The legal threshold for blood-alcohol level in the State of California is 0.08 percent. He was then taken to the hospital.
Petitioner's loss claim filed with his automobile insurance carrier was denied in accordance with the terms of his policy because of his DUI citation and arrest.
On April 13, 2006, petitioner filed his 2005 Form 1040, U.S. Individual Income Tax Return. On that return he claimed a $ 33,629 casualty loss deduction for the damage to his truck. On March 25, 2008, respondent issued a notice of deficiency disallowing petitioner's casualty loss deduction and determining a $ 6,230 income tax deficiency and a $ 1,246 section 6662(a) accuracy-related penalty for *191 petitioner's 2005 tax year. On June 9, 2008, petitioner filed a timely petition with this Court.
Section 165(a) allows a deduction for losses not compensated for by insurance or otherwise. If a loss is not incurred in connection with a trade or business or in a transaction entered into for profit, it may be deducted by an individual if it arises from a fire, storm, shipwreck, or other casualty, or from theft, except as provided in section 165(h). Sec. 165(c)(3). There is no question about whether petitioner's loss generally qualified as a casualty loss under section 165.
Although negligence may not be a bar to a casualty loss deduction, courts have held that gross negligence may be.
Petitioner concedes that his act of driving while intoxicated constitutes negligence. Petitioner, however, disagrees with respondent's contention that his behavior rose to the level of gross or willful negligence, thereby barring a casualty loss deduction.
Neither *192 the Internal Revenue Code nor the underlying regulations define "willful negligence" for purposes of
In "one who drives with a very high level of intoxication is indeed more negligent, more dangerous, and thus more culpable than one who drives near the legal limit of intoxication, just as one who exceeds the speed limit by 50 miles per hour exhibits greater negligence than one who exceeds the speed limit by 5 miles per hour."
We agree with petitioner that his actions did not amount to willful or gross negligence. While petitioner's decision to drive after drinking was negligent, that alone does not automatically rise to the level of gross negligence. "'[G]ross negligence cannot be shown by the
The circumstances do not support a holding that petitioner was willfully or grossly negligent. Petitioner's *194 level of intoxication and the manner in which he drove do not suggest that he was consciously indifferent to the hazards of drunk driving. Unlike the defendant in
Likewise, there is no evidence in the record that petitioner was aware his actions would result in injury. In addition, there was no evidence that excess speed or alcohol directly caused petitioner's accident. On brief, petitioner claimed he lost control of his vehicle because of the windy conditions on the road, and no evidence *195 was presented at trial as to what the precise cause of petitioner's accident was.
In the alternative, respondent contends that petitioner's casualty loss deduction should not be allowed because to do so would frustrate public policy.
Courts have disallowed deductions where national or State public policy would be frustrated by the allowance of a deduction.
California, like most other States, has "a strong public policy against * * * drunk driving." C
In *196 cases where a deduction has been denied, the taxpayers typically knew their actions encouraged an illegal activity or were illegal. See
In contrast, petitioner believed that he was no longer impaired or intoxicated at the time he chose to drive. Moreover, he had taken precautions to avoid driving immediately after drinking. There was no evidence that intoxication, high speed, or reckless driving was the ultimate cause of petitioner's accident. Where the taxpayer is reasonably unaware that he is doing something wrong, it is less likely that allowance of a casualty loss deduction would so severely frustrate public policy as to require disallowance.
In
By contrast, allowing petitioner's casualty loss deduction would not in any way alleviate the "sting" of any punishment imposed by the State of California. In California, a first-time DUI offense is punishable by imprisonment of at least 96 hours and a fine of at least $ 390. See
This Court is not empowered to judge petitioner's actions from a criminal perspective or to punish him for his actions. In reaching our decision, we do not reflect upon or in any way condone the act of driving under the influence of alcohol. It is our obligation to decide whether petitioner's actions amounted to gross or willful negligence and/or whether the allowance of a casualty loss deduction in the setting of *198 this Federal income tax case would frustrate public policy.
We hold that petitioner is entitled to the claimed casualty loss deduction and, accordingly, is not liable for the section 6662(a) accuracy-related penalty.
To reflect the foregoing,
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue.↩
Theodore C. Bonney v. Commissioner of Internal Revenue , 247 F.2d 237 ( 1957 )
Samuel Towers v. Commissioner of Internal Revenue, and ... , 247 F.2d 233 ( 1957 )
People v. Bennett , 54 Cal. 3d 1032 ( 1991 )
Commissioner v. Heininger , 64 S. Ct. 249 ( 1943 )
Tank Truck Rentals, Inc. v. Commissioner , 78 S. Ct. 507 ( 1958 )
Mazzei v. Commissioner , 61 T.C. 497 ( 1974 )