Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 70-90

1970-1 C.B. 37

Sec. 162
Sec. 165

IRS Headnote

The cost of constructing and removing temporary dikes to protect business and non-business property from flooding is not allowable as a casualty loss; however, such cost incurred to protect business property is deductible as a business expense.

Full Text

Rev. Rul. 70-90

A taxpayer used temporary dikes to protect his personal residence (property that was not held for investment, or used in his trade or business) as well as his business property from flooding. The dikes were constructed of earth and sandbags and were removed immediately after the flood water receded. Held, the cost of constructing and removing the temporary dikes is not allowable as a casualty loss under section 165 of the Internal Revenue Code of 1954 with respect to either the business or non-business property. However, the cost of constructing and removing the temporary dikes to protect business property is deductible as an ordinary and necessary trade or business expense under section 162 of the Code.