Esther owns a large home on the Southeast Coast. Her home is surrounded by large, mature oak trees that significantly increase the value of her home. In September 2022, a hurricane damaged many of the trees surrounding her home; her region was declared a Federal disaster area as a result of the hurricane’s damage. In October 2022, Esther engaged a local arborist to evaluate and treat the trees, but five of the largest trees were seriously weakened by the storm. These trees died from disease in 2023. Esther has ascertained that the amount of the casualty loss from the death of the five trees is $25,000; however, she is uncertain in which year to deduct this loss and has come to you for advice. Discuss whether the casualty loss should be deducted in the calculation of Esther’s 2022 or 2023 taxable income.

Partial list of research aids:

Reg. § 1.165–1.

Oregon Mesabi Corporation, 39 B.T.A. 1033 (1939).