## Facts

- Richard Corbaley purchased a used airplane in April 1978 for $6,200; it had a replacement engine of unknown age.
- In July 1978, during flight, the airplane’s engine failed.
- Corbaley determined the failure was caused by extensive wear throughout the engine.
- In 1979, Corbaley bought a new engine for $3,600.
- On his 1978 return, Corbaley claimed a $4,345 deduction as a casualty loss under I.R.C. § 165(c)(3) for the failed engine.
- The Commissioner disallowed the deduction, determining the loss did not qualify as a casualty loss.
- Corbaley petitioned the Tax Court to redetermine the deficiency.

## Issues

1. Whether an airplane engine’s sudden in-flight failure, when attributable to extensive wear, constitutes an “other casualty” deductible under I.R.C. § 165(c)(3).
2. Whether a loss that manifests abruptly but is caused by progressive deterioration is deductible as a casualty loss.

## Decision

- The Tax Court held the loss was not a deductible casualty loss under § 165(c)(3).
- The court sustained the Commissioner’s disallowance of the claimed $4,345 deduction.
- The court treated the engine failure as the result of gradual wear rather than a qualifying sudden, unexpected, and unusual event.

## Legal Principles

- Under I.R.C. § 165(c)(3), an individual may deduct certain nonbusiness losses only if they arise from “fire, storm, shipwreck, or other casualty.”
- “Other casualty” requires an identifiable event that is sudden, unexpected, and unusual.
- Losses attributable to progressive deterioration, wear and tear, or similar gradual causes are not casualty losses, even if the final failure occurs abruptly.
- The taxpayer bears the burden of proving entitlement to a deduction and overcoming the Commissioner’s determination.

## Conclusion

The Tax Court denied Corbaley’s § 165(c)(3) deduction because the airplane engine’s failure, though sudden in occurrence, was caused by extensive wear reflecting gradual deterioration rather than a qualifying casualty event.


Corbaley v. Commissioner, T.C. Memo. 1984-201 (1984)