118 T.C. No. 7
UNITED STATES TAX COURT
WILLAMETTE INDUSTRIES, INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 20094-97, 7712-99. Filed February 12, 2002.
Some of P’s trees were partially damaged and P was compelled to salvage the trees or they would have been lost through decay, insects, etc. The damage forced P to harvest the trees before intended. P had several alternatives for salvage and chose to process the damaged trees into the end products that it normally produces. P, under sec. 1033, I.R.C., seeks to defer only the portion of the gain attributable to the difference between P’s basis and the fair market value of the damaged trees in place. P does not seek to defer the part of the gain attributable to the processing of the trees or manufacturing of the end products. R determined that P is not entitled to defer any gain because P’s ability to use the damaged trees in the ordinary course of its business resulted in a conversion that was not “involuntary” within the meaning of sec. 1033, I.R.C. P contends that it was not its intent to harvest the trees in the taxable year under consideration and that the damage caused an involuntary conversion within the meaning of sec. 1033, I.R.C. - 2 -
Held: P’s circumstances meet the threshold requirements for relief under sec. 1033.
Philip N. Jones and Peter J. Duffy, for petitioner.
William A. McCarthy, for respondent.
OPINION
GERBER, Judge: The parties filed cross-motions for partial
summary judgment.1 The controversy concerns whether petitioner
is entitled to defer gain resulting from the salvage (processing
and sale) of damaged trees under section 1033.2 The parties have
agreed on the salient facts. The controverted issue involves a
legal question that is ripe for summary judgment.3
1 Respondent first moved on Oct. 27, 2000, for partial summary judgment. The parties subsequently reached an agreed set of facts and issues. After the agreement, petitioner, on Apr. 26, 2001, filed its motion for partial summary judgment, which properly frames the issues. Respondent objected to the granting of petitioner’s motion and, on June 14, 2001, advanced a cross-motion for partial summary judgment. Petitioner was also afforded an opportunity to address respondent’s cross-motion. Accordingly, respondent’s motion for partial summary judgment, filed Oct. 27, 2000, is deemed moot. 2 All section references are to the Internal Revenue Code in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure, unless otherwise indicated. 3 Rule 121; Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988); Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988); Naftel v. Commissioner, 85 T.C. 527, 529 (1985). - 3 -
Background
Petitioner is an Oregon corporation with its principal
office in Portland, Oregon. Petitioner operates a vertically
integrated forest products manufacturing business, which includes
the ownership and processing of trees (raw materials) at various
types of manufacturing plants, including lumber mills, plywood
plants, and paper mills. The raw materials used in the
manufacturing process are derived from petitioner’s trees and
from trees grown by others. Approximately 40 percent of
petitioner’s timber needs is acquired from petitioner’s
timberland, which comprises 1,253,000 acres of forested land.
Petitioner suffered damage to some of its standing trees
during each of the years in issue, 1992-95. The damage was
caused by wind, ice storms, wildfires, or insect infestations.
The damage left part of petitioner’s damaged trees standing and
part of them fallen. The intended use of the trees was continued
growth and cultivation until maturity, at which time the trees
would have been systematically and efficiently harvested. The
damage occurred prior to the intended time for harvest.
Petitioner salvaged its damaged trees to avoid further loss
(from decay, insects, etc.) by means of the following steps:
(1) Taking down damaged trees that remained standing; (2) cutting
damaged trees into standard length logs; (3) stripping the
branches from the logs; (4) dragging the logs to a pickup point; - 4 -
(5) grading and sorting the logs; (6) stacking the logs at a
landing point; and (7) loading the logs onto trucks for further
use or processing.
Petitioner chose to take the seven steps described in the
preceding paragraph, rather than attempting to sell the damaged
trees in place to a third party. Once it performed the seven
steps, its options were to (1) attempt to sell the partially
processed damaged trees to a third party; or (2) complete the
processing of the damaged trees in its own plants in the ordinary
course of its business. Petitioner chose the latter and
completed the processing itself.
Petitioner relies on section 1033 for involuntary conversion
treatment (deferral of gain).4 Petitioner did not realize income
from harvesting and processing the damaged trees until it sold
the products it manufactured from the damaged trees. Petitioner
is seeking to defer only that portion of the gain attributable to
the difference between its basis and the fair market value of the
damaged trees as of the time its salvage of them began; that is,
the value petitioner contends would have been recognized if it
4 Petitioner on its returns mistakenly claimed involuntary conversion treatment under sec. 631(a) due to its pro forma use in prior years’ returns in which sec. 631(a) treatment had been properly elected and claimed. Petitioner concedes that sec. 631(a) treatment is not available based on the fact that it did not have a sec. 631(a) election in place during the years in issue. For the 1992 taxable year, one of petitioner’s subsidiaries made a valid sec. 631 election, but the subsidiary was liquidated at the end of the 1992 calendar year. With that exception, petitioner and its subsidiaries were not entitled to sec. 631 treatment for the taxable years 1992 through 1995. - 5 -
had sold the damaged trees on the open market instead of further
processing and/or milling the damaged trees into finished
products. Petitioner further contends that it is not attempting
to defer any portion of the gain attributable to the processing,
milling, or finishing of products.5 Respondent determined that
petitioner understated income by improperly deferring gain from
the sale of the end product of the damaged trees, as follows:
1992--$647,953; 1993--$2,276,282; 1994--$3,592,035; and
1995--$4,831,462.
Discussion
The specific question we consider is whether petitioner is
disqualified from electing deferral of gain under section 1033
because it processed damaged trees into end or finished products
5 Based on a hypothetical example presented by petitioner, the majority of the gain deferred would appear to be attributable to the difference between the fair market value of the damaged trees and petitioner’s basis. Petitioner posed a hypothetical example which included the premises that the damaged trees had a $100 basis and a $475 selling price if sold in place. If the damaged trees were processed into logs, the processing cost would be $25 resulting in a $500 selling price. Petitioner further posits that the cost of milling timber is $100 and that a finished product would have a $610 selling price, resulting in $10 of gain from milling. Petitioner argues that, under this hypothetical, respondent would have allowed a deferral of the $375 gain if petitioner had sold the damaged trees in place. Petitioner contends that respondent has denied any deferral whatsoever, even though the milling of timber into a final product adds only $10 of additional gain in the context of petitioner’s hypothetical. We consider here only whether petitioner is entitled to use sec. 1033. The parties have left to another day the question of the amount of gain to be deferred if petitioner’s motion for partial summary judgment is granted. See infra note 6. - 6 -
rather than being compelled simply to sell the damaged trees.6
Respondent contends that under section 1033 the realization
of gain must stem directly or solely from the damage and the
involuntary conversion. More particularly, respondent asserts
that petitioner’s conversion was not “involuntary” because
damaged trees were processed into end products in the ordinary
course of its business. Respondent points out that section 1033
is a relief provision which does not or should not include
petitioner’s situation; i.e., where the damaged trees are
processed in the same manner as undamaged trees. Finally,
respondent contends that section 1033 was not intended for the
long-term deferral of profits from petitioner’s timber processing
and manufacturing business.7
Petitioner argues that its factual situation complies
literally with the requirements of section 1033 allowing deferral
of gain realized from salvaging its damaged trees. Specifically,
6 The parties have isolated this issue from other unresolved issues, including petitioner’s substantiation of the quantity and value of the damaged trees; the amount of gain realized from sale of damaged trees; the amount of gain that may be deferred; and the determination of the correct year(s) for deferring the gain. 7 Respondent’s contention appears to address the possibility that petitioner reinvested the proceeds (and deferred gains) from the sale of the damaged trees in replacement property in the form of relatively young trees, thereby resulting in lengthy deferral of the subject gains. Respondent’s contention, however, is more properly directed at the question of whether petitioner reinvested the proceeds in qualified replacement property, a question which is not at issue in the cross-motions for partial summary judgment. - 7 -
petitioner contends that it was compelled (in order to avoid
further damage or loss) to salvage (process) the damaged trees
resulting in an involuntary conversion within the meaning of
section 1033. Petitioner also points out that the conversion was
“involuntary” because the damaged trees were not scheduled for
harvest at the time of the damage. In response to respondent’s
argument, petitioner contends that its choices for salvaging the
damaged trees should not preclude deferral of the portion of the
gain that it was compelled to realize on account of the damage to
its trees. Petitioner emphasizes that it is not attempting to
defer gain from processing and/or milling the damaged trees.
Petitioner seeks to defer only that portion of the gain
attributable to the difference between its basis in the damaged
trees and their fair market value at the time the process of
salvaging the trees began. - 8 -
Section 10338 provides, under certain prescribed
circumstances, for relief from taxpayer’s gains realized from
involuntary conversion of property. The relief provided for
under section 1033 is deferral of the gain from involuntary
conversion, so long as the proceeds are used to acquire qualified
replacement property.
The purpose of section 1033 was described, as follows:
The purpose of the statute is to relieve the taxpayer of unanticipated tax liability arising from involuntary * * * [conversion] of his property, by freeing him from such liability to the extent that he re-establishes his
8 Sec. 1033 provides, in pertinent part, as follows:
(a) SEC. 1033(a). General Rule.–-If property (as a result of its destruction in whole or in part, theft, seizure, or requisition or condemnation or threat or imminence thereof) is compulsorily or involuntarily converted–-
* * * * * * *
(2) Conversion into money.--Into money or into property not similar or related in service or use to the converted property, the gain (if any) shall be recognized except to the extent hereinafter provided in this paragraph:
(A) Nonrecognition of gain.–-If the taxpayer during the period specified in subparagraph (B), for the purpose of replacing the property so converted, purchases other property similar or related in service or use to the property so converted, or purchases stock in the acquisition of control of a corporation owning such other property, at the election of the taxpayer the gain shall be recognized only to the extent that the amount realized upon such conversion (regardless of whether such amount is received in one or more taxable years) exceeds the cost of such other property or such stock. Such election shall be made at such time and in such manner as the Secretary may by regulations prescribe. * * * - 9 -
prior commitment of capital within the period provided by the statute. The statute is to be liberally construed to accomplish this purpose. On the other hand, it was not intended to confer a gratuitous benefit upon the taxpayer by permitting him to utilize the involuntary interruption in the continuity of his investment to alter the nature of that investment tax free. * * *
Filippini v. United States, 318 F.2d 841, 844 (9th Cir. 1963).
The earliest predecessor of section 1033 was section
214(a)(12) of the Revenue Act of 1921, ch. 136, 42 Stat. 227
(1921 Act). Except for certain modifications not pertinent to
the question we consider, the purpose and substance of section
214(a)(12) of the 1921 Act was the same as the version of section
1033 under consideration in this case.
Only a limited amount of legislative history has accompanied
the enactment of the various involuntary conversion relief
provisions since 1921. The House and Senate reports issued in
connection with section 214(a)(12) of the 1921 Act explained that
the relief “permits the taxpayer to omit or deduct the gains
involuntarily realized, when he proceeds forthwith in good faith
to invest the proceeds of such conversion in the acquisition of
similar property or in establishment of a replacement fund
therefor.” H. Rept. 350, 67th Cong., 1st Sess. 12 (1921), 1939-1
C.B. (Part 2) 168, 177; accord S. Rept. 275, 67th Cong., 1st
Sess. 15 (1921), 1939-1 C.B. (Part 2) 181, 191.
From that limited legislative history, it can be gleaned - 10 -
that Congress intended relief from involuntary conversions only
to the extent of the “proceeds of such conversion”, and expected
taxpayers to acquire replacement property within a reasonable
time. Obviously, relief was intended only where the conversion
was involuntary. Although Congress was concerned about the
timeliness and “good faith” of efforts in seeking replacement
property, there was no explanation or particular focus upon the
use of damaged assets in the taxpayer’s business.
Where the complete destruction or loss of property has
occurred, there has been only a limited amount of litigation
about whether a taxpayer should be allowed to defer the attendant
gain.9 Where the destruction or loss to property is partial,
however, additional questions have arisen.
In C.G. Willis, Inc. v. Commissioner, 41 T.C. 468 (1964),
affd. 342 F.2d 996 (3d Cir. 1965), the taxpayer’s ship was
damaged in a 1957 collision, and the insurance company paid
$100,000 to the taxpayer. The insurance payment was
approximately $9,000 less than the taxpayer’s basis in the ship,
and, accordingly, no gain was realized for 1957. In 1958,
however, the taxpayer sold the damaged, but unrepaired, ship for
an amount which exceeded the remaining basis by approximately
$86,000. Under those circumstances, it was held that the 1958
9 More often, the controversies focus upon which property had been converted and/or the definition of “replacement property.” - 11 -
sale was not an “involuntary conversion” within the meaning of
section 1033 so that the gain had to be recognized and could not
be deferred. In so holding, it was explained that the damage to
the taxpayer’s ship was insufficient to compel the taxpayer to
sell and, accordingly, the sale was not involuntary. Id. at 476.
In that setting, “involuntary conversion” under section 1033 was
defined to mean “that the taxpayer’s property, through some
outside force or agency beyond his control, is no longer useful
or available to him for his purposes.” Id.; see also Wheeler v.
Commissioner, 58 T.C. 459, 462-463 (1972) (where it was held that
the taxpayer’s choice to destroy his building was not an
involuntary conversion).
In S.H. Kress & Co. v. Commissioner, 40 T.C. 142, 153
(1963), we held that condemnation of the taxpayer’s property was
imminent and unavoidable, and that the only realistic
alternatives were to either await condemnation or to sell to an
appropriate buyer. We found that those circumstances met the
“compulsorily or involuntarily converted” requirement of section
1033, (citing Masser v. Commissioner, 30 T.C. 741 (1958)).
Accordingly, even though a taxpayer has choices or alternatives a
disposition may be deemed involuntary so that section 1033 relief
remains available.
Masser v. Commissioner, supra, involved section 112(f)(1) of
the Internal Revenue Code of 1939 (another predecessor of section - 12 -
1033). In Masser, the taxpayer operated an interstate trucking
business from two proximately positioned pieces of business
realty that were used as part of a single economic unit. One of
the properties was subject to imminent condemnation, but the
taxpayer sold both parcels. In that circumstance, we held that
both pieces of realty were involuntarily converted and the gain
from both could be deferred.
Those cases reveal two general elements as being necessary
to qualify for deferral of gain under section 1033. First, a
taxpayer’s property must be involuntarily damaged, and second the
property must no longer be available for the taxpayer’s intended
business purposes for the property.
The Commissioner issued a revenue ruling that specifically
focused on whether gain from the sale of trees damaged by a
hurricane qualified under section 1033. In that ruling it was
held that the gain on sale of uprooted trees was “voluntary” and,
in addition, that there was no direct conversion into money in
the circumstances expressed in the ruling. See Rev. Rul. 72-372,
1972-2 C.B. 471. The principal rationale for the holding of Rev.
Rul. 72-372, supra, was that the hurricane did not cause the
conversion of the trees into cash or other property directly
resulting in gain from the damage.
In a second ruling, however, the 1972 ruling was revoked.
See Rev. Rul. 80-175, 1980-2 C.B. 230. The 1980 ruling permitted - 13 -
deferral of gain from the sale of damaged trees. The factual
predicate for both rulings was as follows:
the taxpayer was the owner of timberland. As a result of a hurricane, a considerable number of trees were uprooted. The timber was not insured, and once downed, was subject to decay or being rendered totally worthless by insects within a relatively short period of time. The taxpayer was, however, able to sell the damaged timber and realized a gain from such sale. The proceeds of the sale were used to purchase other standing timber.
The rationale articulated in Rev. Rul. 80-175, supra, is
that gain is “postponed on the theory that the taxpayer was
compelled to dispose of property and had no economic choice in
the matter” and that the taxpayer “was compelled by the
destruction of the timber to sell it for whatever the taxpayer
could or suffer a total loss.” Id., 1980-2 C.B. at 231.
Accordingly, the taxpayer in the 1980 ruling was found to have
met the two part test; i.e., that the damage was involuntary and
the timber was no longer available for the taxpayer’s intended
business purpose. Most significantly, the 1980 ruling eliminated
the requirement that the damage-causing event convert the
property directly into cash or other property.
The 1980 ruling also contained a comparison with the holding
in C.G. Willis, Inc. v. Commissioner, supra, as follows:
In the present case, the downed timber was not repairable and was generally no longer useful to the taxpayer in the context of its original objective. The destruction caused by the hurricane forced the taxpayer to sell the downed timber for whatever price it could - 14 -
get. Unlike the situation in Willis, the sale of the downed timber was dictated by the damage caused by the hurricane. [Rev. Rul. 80-175, supra, 1980-2 C.B. at 232.]
The taxpayer in the 1980 ruling apparently intended to grow
trees and/or hold timberland for sale at a particular maturity.
The hurricane caused the taxpayer to involuntarily sell/use the
trees prior to the time intended for harvest or sale. The
taxpayer’s intended purpose or use was only affected as to
timing, and the sale was prior to the time the taxpayer intended
to sell or harvest.
Returning to the disagreement here, petitioner contends
that, at the time of the damage, it did not intend to harvest the
damaged trees, so that the conversion was involuntary and within
the meaning of the statute.10 Petitioner argues that a taxpayer
may not have a choice as to whether to dispose of damaged
property, but a taxpayer may have a choice as to how to dispose
of damaged property.
Respondent contends that petitioner should not be entitled
to such deferral because of its choice to further process the
10 Petitioner also relies on the published revenue rulings and on a number of private letter rulings (PLRs), which it contends permitted sec. 1033 deferral in factual circumstances substantially similar to those we consider here. On brief, the parties devoted a relatively large portion of their arguments to discussing the PLRs. Although we have considered the rationale used by the parties in discussing the rulings, the parties and the Court are statutorily proscribed from citing the PLRs as precedent. See sec. 6110(k)(3). - 15 -
trees into logs or finished products, its original intention.
Respondent’s position in this case is a reversion to the
requirement of the 1972 ruling that the sale (conversion to cash)
be the direct result of the damage-causing event. For more than
21 years, the Commissioner’s ruling position has permitted
section 1033 deferral even though the conversion is not directly
into cash.
Petitioner in this case is effectively no different from the
taxpayer in the 1980 ruling.11 Petitioner’s conversion was
involuntary, and petitioner was forced to act or suffer complete
loss of the damaged trees. Section 1033 could be interpreted to
permit either a direct or an indirect conversion. The case law
permits indirect conversion, but the Commissioner’s 1972 ruling
denied relief because the trees damaged by the hurricane were
sold by the taxpayer. The Commissioner, in revoking the 1972
ruling has permitted, since 1980, section 1033 relief where there
is a sale (a voluntary act) of the damaged property. Respondent
has denied relief here because petitioner processed rather than
sold the damaged trees.
The critical factor is that petitioner was compelled to
harvest the damaged trees prior to the time it had intended. The
11 Respondent has not argued that the 1980 ruling was not in accord with sec. 1033 or the case law. Respondent’s position in this case, however, does not comport with the outcome or reasoning of the 1980 ruling. - 16 -
possibility that the partial damage to petitioner’s trees might
have been relatively small or resulted in a nominal amount of
reduction in gain is not a reason to deny relief. In addition,
if petitioner’s salvage efforts were more successful than other
taxpayers that is not a reason for denial of relief under section
1033.
Petitioner’s circumstances fulfill the statutory purpose and
intent. There was unanticipated tax liability due to various
casualties that damaged the trees. Petitioner seeks to defer the
gain that was occasioned by the damage and which it had
reinvested in like property. Petitioner had not planned to
harvest the damaged trees. Identical to the taxpayer’s situation
in the 1980 ruling, petitioner’s trees were damaged by forces
without its control, and petitioner was compelled to salvage its
damaged trees prior to the intended date for harvest, sale,
and/or processing into end products. Unlike the taxpayer in C.G.
Willis v. Commissioner, supra, petitioner was forced to salvage
(process or sell) the damaged trees or suffer a total loss.
Respondent’s attempt to distinguish petitioner’s situation
from the ruling does not reconcile with the rationale of the 1980
ruling, the underlying statute, and case law. The taxpayer in
the ruling and petitioner were both forced to salvage the damaged
trees or suffer the imminent and total loss of the damaged trees.
The taxpayer in the ruling and petitioner were prematurely forced - 17 -
to salvage (sell or use) the damaged trees. The damaged trees
were used in their businesses, but not in the same manner as they
would normally have done. In the 1980 ruling, the taxpayer was
forced to sell the trees under unintended business conditions.
Likewise, petitioner was forced to use the damaged trees, albeit
in its manufacturing process, under unintended business
conditions; i.e. before maturity and/or before the time at which
the trees would normally be ready for efficient harvest.
Respondent also argues that petitioner is not entitled to
defer gain because “there were no actual sales of damaged
timber.” Respondent argues that section 1033 requires a sale or
conversion of the damaged property into money or property similar
in use to the damaged property. Section 1033 simply requires
that property be involuntarily converted into money or property.
There is no requirement, as argued by respondent, that the
deferred gain be derived in a particular manner; i.e., only from
a distress sale. Based on the holding of Rev. Rul. 80-175, 1980-
2 C.B. 230, it is unlikely that respondent would have questioned
the deferral of gain if petitioner had been forced to sell the
damaged trees in place.12
12 If we were to approve respondent’s approach, taxpayers, who were unable to sell damaged assets without some additional processing would be denied sec. 1033 relief. That distinction could not have been intended and certainly was not expressed in the legislation. - 18 -
Finally, respondent contends that section 1033 was intended
to provide relief for taxpayers who experience “destruction [of
property] in whole or in part”. Although respondent agrees that
petitioner had a casualty, damage to the trees, and petitioner
was compelled to salvage them, respondent infers that
petitioner’s situation is somehow not directly affected by the
destruction. Respondent contends that petitioner’s gain is
voluntary or not caused by the damage because petitioner is able
to process the logs into finished products.
Admittedly, petitioner’s circumstances may appear more
favorable than might have been expected after a “casualty”, but
the statute does not have a quantitative threshold. Petitioner
is not seeking a windfall in the form of the deferral of gain
from processing and/or making the finished products. Nor is
petitioner attempting to “utilize the involuntary interruption in
the continuity of his investment to alter the nature of that
investment tax free.” Filippini v. United States, 318 F.2d at
844. Petitioner is seeking to defer the unexpected gain that
resided in trees that it had not, at the time of the damage,
intended to harvest and to reinvest that gain in trees that will
fulfill petitioner’s intended purpose.13 Such deferral was the
13 Contrary to the import of respondent’s argument, petitioner did not intend to harvest trees that happen to become diseased or damaged. Petitioner intended to efficiently and (continued...) - 19 -
intended purpose for the enactment ofsection 1033.
Respondent argues that the purpose of section 1033 may be
better served where a taxpayer is unable to process damaged
property into the taxpayer’s usual product(s). But that
disability is not a threshold for relief or a requirement of the
statute. Section 1033 is a relief provision, and we are to
construe it liberally to effect its purpose. Davis v. United
States, 589 F.2d 446, 450 (9th Cir. 1979); Asjes v. Commissioner,
74 T.C. 1005, 1014 (1980).14
Respondent would have this Court impose its own judgment as
to which taxpayer deserves relief. So, for example, if a
taxpayer, like the one in the 1980 ruling, was growing trees for
eventual sale, relief is available even though the taxpayer sells
the damaged trees to its usual customers. Under respondent’s
suggested approach, petitioner would not be entitled to relief
because it had choices other than sale; i.e., to further process
the damaged trees. Petitioner, under respondent’s approach,
13 (...continued) systematically harvest trees and to maximize its profit. It was not petitioner’s intent to randomly cull and process trees that happened to become damaged. 14 Respondent also argues that, if petitioner is entitled to sec. 1033 relief in the circumstances of this case, the “narrowly tailored relief provision” will become difficult to administer (with respect to the deferral aspects) and permit relief whether or not it is needed. These arguments, made for purposes of emphasis, do not persuade us that the statute withholds relief in this situation. - 20 -
would be deprived of relief from involuntarily generated gain
merely because of happenstance. Under that type of reasoning,
petitioner would be denied relief merely because it was a grower
of trees and also a manufacturer of products using trees, whereas
a similarly situated grower of trees without the ability to use
the damaged trees to make products would be entitled to relief,
even though its damaged trees might ultimately be manufactured
into products by others. The line respondent asks us to draw
would be illusive and a matter of conjecture.
Petitioner was growing its trees for harvest when they
reached a certain maturity. The damage occurred outside of
petitioner’s control and forced petitioner to salvage its trees
earlier than intended. That situation is indistinguishable from
the circumstances set forth in Rev. Rul. 80-175, 1980-2 C.B. 230,
where the taxpayer’s trees were felled by a hurricane. The fact
that the damage was sufficiently partial so as to result in a
substantial amount of deferral is not a reason, under the
statute, to deny relief.
We read the statute in light of respondent’s Rev. Rul. 80-
175, supra, which has been outstanding for 22 years.
In view of the foregoing,
Appropriate orders will be
issued.