18.6 Damage to Trees and Shrubs

Not all damage to trees and shrubs qualifies as a casualty loss. The damage must be occasioned by a sudden event (18.1). Destruction of trees over a period of 5–10 days by southern pine beetles is deductible. One court allowed a deduction for similar destruction over a 30-day period. However, damage by Dutch Elm disease or lethal yellowing disease has been held to be gradual destruction not qualifying as a casualty loss. The Tax Court has allowed a deduction for the cost of removing infested trees, but denied a deduction for the loss of trees after a horse ate the bark.

If shrubbery and trees on personal-use property are damaged by a sudden casualty, you figure the loss on the value of the entire property before and after the casualty. You treat the buildings, land, and shrubs as one complete unit; see Example 2 below.

In fixing the loss on business or income-producing property, however, shrubs and trees are valued separately from the building; see Example 1 below.

EXAMPLES
1. Wayne Smith bought an office building for $90,000. The purchase price was allocated between the land ($18,000) and the building ($72,000). Smith planted trees and ornamental shrubs on the grounds surrounding the building at a cost of $1,200. When the basis of the building had been depreciated to $66,000, a hurricane caused extensive property damage in 2012. The fair market value of the land and building immediately before the hurricane was $18,000 and $80,000; immediately ...

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