Chamales v. Commissioner

Gerald and Kathleen Chamales (plaintiffs) were in escrow to buy a home in Brentwood Park when their famous neighbor, O.J. Simpson, was accused of murder, drawing outsiders and traffic into the neighborhood and causing minor property damage and an estimated 30% drop in their property's value. They closed the purchase anyway and later deducted the loss in value as a casualty loss on their tax return. The Commissioner of Internal Revenue (defendant) disallowed the deduction and imposed an accuracy-related penalty, and the Chamaleses petitioned the Tax Court, having continued (like their neighbors) to invest money maintaining their properties in the years after.