Drinking and Driving: Taxpayer Allowed to Take Casualty Loss for Car He Wrecked

Drinking and Driving: Taxpayer Allowed to Take Casualty Loss for Car he Wrecked

This article was very interesting in regards to a very peculiar situation that involved a man who had been charged with driving under the influence and wreck his 2006 Ford F-350. But this wasn't the sticky part of the situation, the situation became unclear when the man who had been charged with driving under the influence decided to file casualty loss deduction for the damages his truck suffered during the incident. It states in the article, "Generally, damages to a motor vehicle may not be the subject of a casualty loss when the damage is due to a willful act or willful negligence, under Treasury Regulations section 1.165 -7 (a) (3)". This was the key concept that was being tried and tested from every angle and stance throughout this Tax Court Case Rohrs vs. Comm'r.

Some quick background info regarding this interesting trial so that you will understand in depth how intricate the case actually was. The article in the CPA describes the case very well by stating, "During August 2005, Justin M. Rohrs (petitioner) purchased a 2006 Ford F-350 pickup for $40,210.65. On October 28, 2005, he attended a gathering at a friend's house. Foreseeing that he might partake of alcoholic beverages, he arranged for some- one to drive him to and from his home, but sometime later that evening, he decided to drive to his parents' home in his new pickup. On the way, he failed to negotiate a turn, slid off the road and over an embankment, and severely damaged the truck. The investigating police arrested cited him for driving under the influence (DUI) because his blood alcohol level was measured at 0.09% (California law set the legal threshold for DUI at 0.08%). Rohrs filed a damage claim with his automobile insurance carrier, but his claim was denied because the terms of the policy did not cover damage suffered while DUI. On April 13, 2006, Rohrs filed his 2005 Form 1040, claiming a $33,629 casualty loss deduction for the damage to his truck. On March 25, 2008, the IRS issued a notice of deficiency, disallowing the casualty loss

deduction and imposing a $6,230 income tax deficiency and a $1,246 IRC section 6662(a) accuracy-related penalty for the 2005 tax year. On June 9, 2008, Rohrs petitioned the Tax Court, pro se, for relief." Through reading this excerpt from the CPA Journal you can see why this was a tricky case for the court to rule on.

There were some key questions that first needed to be clarified before making a justified ruling in the case. The main question being considered is " But is driving a motor vehicle while only slightly intoxicated considered willful negligence by the tax court." Because the article further states, "Treasury Regulations section 1.165-7(a)(3) provides that a deduction is not available for the willful act or willful negligence of