A551 Case Assignment 9

A551 Case Assignment 9 - Tax Research Case A551 Casualty...

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Tax Research Case A551 Casualty Loss Deduction Christina Kieninger & Eva Yihua Luo April 17, 2009
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Date: April 17, 2009 To: File From: Christina Kieninger and Eva Yihua Luo (A551) Re: Deduction of home value loss from water pollution Facts Client, Muddy Waters and his wife, would like to file a joint income tax return and deduct the home value loss that he feels was created from industrial pollution of the river behind his home. The couple and their children live north of Indianapolis on a tributary of the White River. They bought the home because it was located on the river where the family could boat and fish - - probably not swim, since it was too muddy. They purchased the home five years ago for $500,000 and the pollution happened 4 years ago. The industrial pollution caused thousands of fish to be killed in the White River and now nobody wants to get close to the water. He had no idea there might be a pollution problem before purchasing the home. He has gotten no appraisal of the property, has not attempted to sell the property and has not attempted to recover damages. Muddy did attempt to contact authorities (EPA) within 120 days of when he noticed the pollution. ( why is this relevant – 120 days?) The property is insured. The property has sustained no physical damages from the pollution.
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A551 Case Assignment 9 - Tax Research Case A551 Casualty...

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