(dissenting):
The issue to be determined is how to measure an uninsured casualty loss to a timber tract. In an attempt to sustain the Commissioner’s position, the majority find it necessary to go through a series of difficult contortions which have absolutely no relation to the casualty loss provision. In so doing, the majority disregard the only salient inquiry in the case, namely, what was the intent of Congress in enacting the casualty loss deduction in relation to these timber owners.
While discerning the intent of Congress is often a difficult objective for a court to achieve, there is no dispute that the limit on a casualty loss deduction is the basis of the property damaged or destroyed. The problem is what is the “property” here. Although conceding that the single timberland becomes two separable properties for tax purposes (the land and the trees), the majority artificially seek to break down the same property further for casualty loss purposes, defining each tree as separate property and assigning to each an adjusted basis (measured in board feet) of its own. Trees not measured in board feet are simply deemed by the majority opinion to have an adjusted basis of zero, which is certainly very convenient in their effort to rationalize the Commissioner’s position. The difficult aspect of *501this theory is that there is no provision, or combination of provisions, in the Code which justifies it. No statutory support exists for assigning to each tree on a timber tract a basis of its own for the purpose of determining a casualty loss deduction. The effect of the majority’s effort is to create such a provision by judicial fiat and unjustly to limit the taxpayers’ deductions. The result, wholly unwarranted as a matter of law, fact or reason, is to attribute to a timber tract characteristics of a lumber yard, with the entire inventory of wood cut and stacked in piles, while denying to the tract its organic qualities.
In reaching this conclusion, the majority have virtually ignored the relevant regulations under the casualty loss provision, the history of Internal Revenue’s treatment of partial casualty losses, pri- or case law and inconsistent tax treatment of areas closely related to timber where the full extent of casualty loss has been allowed. In fact, the opinion fails to discuss an inconsistency even closer to home, namely the different treatment the Commissioner accords to large and small timber involved here, allowing only a partial deduction for the large trees destroyed, yet permitting full deduction for small trees. Because these factors point strongly to a contrary conclusion and since the majority have chosen to disregard them, I find it necessary to dissent.
There is no disagreement as to the basic facts concerning the casualty loss. On March 2, 1960 an ice storm severely damaged the timber on the joint venture’s tract, reducing its fair market value, as the Tax Court found, by at least $130,000. The loss of timber, which was widely scattered throughout the tract, was estimated to be 4,757,000 board feet of saw timber1 and 5,058.3 cords of pulpwood,2 as well as loss of young growth 3 and plantations.4
The joint venture deducted $130,500.38 as a casualty loss on its 1960 partnership informational return and the taxpayers took the appropriate percentage on their tax statements for the same year. The amount so deducted represented the fair market value of the saw timber, pulpwood, young growth and plantations destroyed by the storm. The fair market value of the saw timber destroyed as of March 2, 1960 was $104,787.29; the value of the pulpwood destroyed was $11,634.09; the value of the young growth amounted to $12,173 and the value of the plantations was $1,906.
The Commissioner in his deficiency notice, while allowing the $1,906 claimed as damage to the plantations, disallowed all but $17,315 of the remaining amount claimed as a casualty loss. The Commissioner permitted a deduction for the saw timber alone and computed the deduction by multiplying the unit rate for depletion, $3.64 per 1,000 board feet, by the estimated 4,757,100 board feet of saw timber destroyed. This is the method for computing the deduction for depletion under Section 611.5
*502The difference in result between the position of the taxpayers and the position of the Commissioner of Internal Revenue (the Commissioner) is, therefore, substantial. The taxpayers, if sustained, would be entitled to a deduction of over $130,000, whereas if the Commissioner should prevail the allowable deduction would be limited to $17,315.
Section 165(a) of the Internal Revenue Code (the Code) permits a deduction for casualty loss sustained during the taxable year and not compensated for by insurance or otherwise. Section 165(b) limits this deduction to not more than the adjusted basis of the property destroyed or damaged. Neither Section 165(a) or (b), nor any other section of the Code provides any specific formula for measuring the amount of the allowable deduction.
However, consistent with Sections 165 (a) and (b), Treasury Regulation § 1.-165-7 (b) (1) provides in relevant part that the amount of the deductible loss “shall be the lesser of either — (i) the amount which is equal to the fair market value of the property immediately before the casualty reduced by the fair market value of the property immediately after the casualty; or (ii) the amount of the adjusted basis prescribed in § 1.1011-1 for determining the loss from the sale or other disposition of the property involved.” The regulations also provide that the loss incurred is to be determined “ * * * by reference to the single, identifiable property damaged or destroyed.”6 Reg. § 1.165-7(b) (2) (i).
Petitioners maintain that the “single, identifiable property damaged” is the partially damaged timber tract, containing injured trees as well as those which were spared. Certainly a timber tract is aptly described by the phrase “single, identifiable property.” The Commissioner and the Tax Court admit that the 24,605.6 acres were operated as a single tract, and were managed and depleted as an operating unit. This is what the taxpayers purchased; they did not acquire, as the majority contend, individual trees or a specified number of board feet of timber. The tract is, therefore, both “single” and readily “identifiable.” Taxpayers persuasively maintain that the “adjusted basis limitation” for a casualty loss deduction, established by Section 165(b), is the adjusted basis of the entire tract of timber, entitling them to deduct the full extent of their $130,500.38 loss, since it is less than the adjusted basis of $212,476.30 in the whole tract.
There is no dispute that petitioners’ timber tract did suffer at least $130,000 in damage as a result of the ice storm and that they have not been compensated by insurance or otherwise. But the Commissioner seeks to limit their deduction to a significantly smaller amount. He maintains that petitioners should only be permitted a casualty loss deduction on the estimated 4,757,000 board feet of saw timber damaged or destroyed, but not for the other types of timber injured — namely, the pulpwood and the young growth. Under the Commissioner’s theory, only the saw timber has an adjusted basis. Specifically, he insists that the “single identifiable property damaged or destroyed” is each individual tree that was harmed. He asserts that each tree has its own adjusted basis, measured in board feet, and that trees not measured in board feet have no adjusted basis. In effect, the Commission*503er contends that the petitioners ought not to be better off from a casualty than from a sale. The Commissioner premises his position on “the inter-relationship of the Code provisions relating to the timber investor and the taxpayer who seeks a casualty loss,” and on the authority of the per curiam decision in the Fourth Circuit, Harper v. United States, 396 F.2d 223 (1968), affirming 274 F.Supp. 809 (D.S.C.1967), which was decided after the Tax Court decision in the instant case.
As the majority concede, no section of the Code, or combination of sections, specifically mandates the result the Commissioner seeks, his position is essentially an argument by inference from the statute. Theré is no disagreement that Section 165(b), in establishing the maximum amount for an allowable deduction for casualty loss, sets this limit by reference to Section 1011. Section 1011 and its numerous cross references tell us nothing except that “the basis of property shall be the cost of such property,” after adjusting for deductions taken in computing income. The cross references in Section 1011 are to Section 1012, which defines basis as cost, and to “other applicable sections of this subchapter [namely, Subchapter O] and subchapters C, K and P.” No depletion provisions are located in Subchapter O or in Sub-chapters C, K or P. Thus, by the express terms of the statute, the maximum deductible loss for a casualty seems to be the cost, as adjusted, of the property damaged or destroyed, and in this case the limit would be the adjusted basis of the timber tract.
The taxpayers argue quite reasonably that the “property” referred to in Section 1011 and Section 1012 is the entire timber tract. The depletion sections, on which the majority rely, define property . on which depletion is to be allowed as “an economic interest in standing timber in each tract or block representing a separate timber account.” Reg. § 1.611-1 (d) (1). Likewise, Section 612 makes apparent that the “basis for cost depletion” is the adjusted basis of the entire timber tract. Certainly this is the property the taxpayers purchased and this is the property which is depleted when timber is cut and sold. Nothing in either Section 165, 1011 or 1012 even suggests, let alone requires, that the cost of the tract for casualty loss purposes should be allocated to individual trees. If the depletion provisions recognize that the “property” on which depletion is to be allowed is the tract of timber, it is even more persuasive that the adjusted basis of the whole tract sets the limit on a casualty loss deduction.
The majority reject this approach as “overly simplistic” and instead adopt the more tortuous route of the Commissioner. Essentially, the argument of the Commissioner, adopted by the majority, is that when timber is sold it is sold in units of board feet and a depletion deduction is allowed. Because this depletion deduction represents allocated cost, the argument runs, it should be the limit of the taxpayers’ casualty loss, just as the cost of lumber destroyed in a lumber yard would set the maximum deduction.
In support of his position that the limit of petitioners’ deductible loss is the depletion allowance they would have received had the timber been sold rather than destroyed, the Commissioner refers to Section 631(a). This section permits a taxpayer to make an election to treat the cutting of timber rather than its sale as the taxable event. It provides that “gain or loss to the taxpayer shall be recognized in an amount equal to the difference between the fair market value of such timber, and the adjusted basis for depletion of such timber in the hands of the taxpayer.” [Emphasis added.] The “adjusted basis for depletion” is defined in the regulations as equivalent to the depletion deduction for timber provided in Section 611. Reg. § 1.631-l(d).
The Commissioner draws the inference that “adjusted basis for depletion” in Section 631(a) must be equivalent to “adjusted basis” provided in Section 1011, and thus be the limit on an allowable casualty loss. He argues that to apply “adjusted basis” in one way to *504calculate gain or loss and depletion and in another way to fix the allowable casualty deduction would be inconsistent with established canons of statutory construction.
The amici contend that this phrase, “adjusted basis for depletion,” is used in Section 631(a) for convenience alone. Although this suggestion is made with some diffidence due to the absence of any legislative history to support it, some support is available since no provision of the Code defines the phrase, as would normally be expected. Additionally, “adjusted basis” in Section 631(a) is qualified by “for depletion,” thus indicating that it is to be used in depletion situations only. According to the regulations “the depletion of timber takes place at the time timber is cut.” Reg. § 1.611-3(b) (1). Furthermore, Section 631(a) is the only place in the Code where the phrase occurs and that section has no bearing on the problem before us. There is also no reference in Section 631(a) to “adjusted basis” in Section 1011 or to the “adjusted basis limitation” for casualty losses in Section 165(b). More importantly, there is no reference in Section 1011 or in Section 165(b) to any depletion provision. It is quite apparent then that if Congress had intended the result the Commissioner now seeks, and specifically had intended that “adjusted basis” in Section 1011 to be the depletion deduction in Section 611, or the “adjusted basis for depletion,” for the purpose of setting a maximum on a casualty deduction, it would have been very easy to have so worded the statute, namely, by including the appropriate reference in Section 1011.
In the absence of such a reference, the majority seek to create one through the vehicle of “allocated cost.” Yet the purpose of cost depletion is to allocate a fair proportion of the basis to what the taxpayer voluntarily elects to sell in a given year. Depletion signifies the process of using up capital assets in normal business operations. For tax purposes, cost depletion is an allowance from income for the exhaustion of such capital assets. Were all revenue from the cutting and sale of timber from a timber tract treated as gain, taxpayers would .be taxed in part on return of capital. But provisions allowing a limited annual deduction for normal exhaustion during regular business operations have no place in determining the amount deductible from uncompensated casualty losses. As the Board of Tax Appeals stated “the provisions of law governing depletion allowances do not extend to the determination of deductible losses on account of storm, fire or other casualties.” Lock, Moore & Co., Ltd. v. Commissioner, 7 B.T.A. 1008, 1011 (1927). Since casualties frequently can and do result in very substantial and irregular damage to property, the reasons for the application of cost depletion, which provide simply for regular and limited annual deductions, are not present. Additionally, there is no explicit cross-reference in the casualty loss provisions to depletion sections. There is also no legislative history offered or found which would justify the use of cost depletion in casualty loss situations. It is thus the normal shrinkage in quantity of timber due to its use or sale that the depletion allowance of the statute is designed to take care of and not extraordinary losses due to casualties. Lock, Moore & Co-., Ltd., supra at pages 1010, 1011.
To a great extent, the same is true with depreciation. Depreciation also signifies the consuming of capital assets. For tax purposes, it is an allowance from income for wear and tear to such capital assets. But to require a taxpayer who suffered a casualty loss to deduct only a proportion of his basis, which fraction was less than the loss suffered and which coincides with the depreciation he would have received had the basis been adjusted over a period of time, would deny him the full deduction Congress expected him to receive when it enacted Section 165. See discussion infra. Similarly, to insist on the use of cost depletion for determining the allowable loss deduction for damage to a timber tract is to insist on pro rata treatment with respect to partial *505casualty losses. Such a result is also contrary to the ordinary deduction Congress intended.
Since the “property” which the taxpayers purchased was the timber tract and not each specific tree on the tract, as contended by the majority, the adjusted basis of that “property” establishes the limit on an allowable casualty loss deduction. The depletion provisions on which the majority themselves rely indicate that the “property” on which depletion is to be taken is the entire timber tract. Reg. § 1.611-(d) (1); Section 612. The timber tract is clearly the “property” being depleted. The error the majority make is in looking solely to the amount of cost allocable to saw timber when it is sold, rather than on focusing on what the property was the taxpayers purchased and on the basis of that property. When the timberland was bought in 1951 and 1956, the taxpayers divided the purchase price between the land and the timber. Each became separate property and each had its own basis.
It may be conceded for argument purposes that generalized damage to a tract can be broken down into its component parts and the taxpayers have done this by specifying types of timber injured. But the majority seek to go even further by dividing the tract into each specific tree and assigning an adjusted basis— the depletion allowance — to each. The majority claim that the latter sets the maximum amount for an allowable casualty loss. But they have, in fact, missed the forest for the trees.
No one disputes that the most taxpayers could deduct if the merchantable timber destroyed had been cut and sold would have been the depletion allowance. However, more than merchantable timber was lost. Immature growth was also destroyed. The Commissioner ignores this but this is especially important to the value of the tract. As will be discussed, the market value of a tract, dependent on its future productivity, is diminished when small trees are lost. Yet the majority and the Commissioner treat the partial casualty loss to the tract of timber as substantially equivalent to a hypothetical sale of merchantable timber, even though the young growth and plantations, at least, and perhaps even the pulpwood, are of non-marketable size. Loss of immature growth is clearly damage to the tract. By limiting the taxpayers’ deduction to the depletion allowance, the majority disregard the weaknesses in the analogy to partial sale of the tract.
The Analogy to Partial Sale
The Commissioner’s contention that the casualty loss deduction is limited to the depletion deduction for the destroyed timber is premised on the argument that the ice storm which occurred in March, 1960 can be equated with a pro tanto sale of the injured trees. The Tax Court in approving the Commissioner’s approach likewise sanctioned such analogy when it stated “[W]e conclude that where property is such that it is normally allocated a specific basis upon its disposition, as in the case of timber, a casualty loss of such property should likewise be limited to the basis of the specific property lost in the casualty.7
An analysis, however, of the argument based upon analogy to partial sale discloses other fallacies. A partial sale generates assets roughly equivalent to the value of the part sold, which the owner can productively re-invest. An uninsured casualty loss, on the other hand, yields no such assets and more likely the owner will find himself in need of funds to restore the property damaged. A partial sale also indicates that the property is economically divisible and it is therefore reasonable and proper to apportion the basis of the property according to what is disposed of and what is kept. A partial casualty loss presupposes no such divisibility. Often the entire damage must be replaced before the whole is again productive. Fre*506quently the very random character of the damage accounts for serious injury. Random damage accounted for a decrease in the timber tract’s value in the present case. Due to the increased cost in removing the timber, because of the decrease in density of the tract, and due to the increased susceptibility of the tract to damage by disease, insects and storm because of the existence of fallen trees on the tract, some portions of the tract had to be “clear cut” and replanted.
To sanction the Commissioner’s analogy to partial sale would be to treat the timber on petitioners’ tract as identical to an inventory of cut timber, rather than as part of a vital and developing timber unit. Because a timber tract is an organic unit, an injury to it cannot be fully measured simply by estimating the number of board feet of merchantable timber destroyed. The Commissioner’s position fails to give recognition to the nature of a timber tract and to the fact that its value depends primarily on its ability to produce marketable timber over a period of time without interruption or diminution. His approach ignores the fact that timber owners, including timber owners in the paper industry, invest in timber tracts in order to obtain a continuous return from their investments. The consulting forester’s management of petitioners’ timber tract illustrates this very point. Generally only half of the self-generated immature growth in an area is cut in one year, thereby insuring that marketable timber is developed on a consistent basis.
The Commissioner and the majority contend that there is no substantiation in this record for any claim of monetary damage to the tract itself. The majority asserts, therefore, that a casualty loss to a timber tract should not be treated differently from losses on voluntary sales. Under their theory, since timber is commonly sold in units with an appropriate deduction for depletion, the Code provisions for cost depletion should be used in dividing up the basis under Section 165(b). The fallacy with this theory, as noted earlier, is that trees of non-merchantable size were destroyed. Even under the majority’s view, since such timber is not normally sold in units, it can only be considered as inherently part of the timber tract. If a selective hypothetical storm destroyed only the young growth on a tract, leaving the larger trees intact, a serious loss to the tract itself would result. The majority err when they claim that the taxpayers have no basis in the young growth. The taxpayers do have basis in the tract, and loss of small trees, which are not salable as an end product, can only be considered as damage to the tract itself. Not to permit a deduction for such loss means that the resultant decrease in the value of the tract goes unrecognized and the owner forced to bear the uncompensated loss without deduction.
Furthermore, according to the appraiser’s report introduced at trial, based on 51 random plots over six days of inspection, about 43 percent of timber 4 inches at breast height and 47 percent of the 6 inch timber (pulpwood) were lost, as well as 28 percent of the 8 inch timber, 22 percent of the 10 inch timber, 13 percent of the 12 inch timber and 6 percent of the 14 inch timber (saw timber). The Tax Court stated “The facts show that from the standpoint of either the fair market value of the timber destroyed by the ice storm or the difference in the value of the joint venture’s entire tract of timber before and after the storm, the joint venture sustained a loss of approximately $130,000.” 48 T.C. at 523. The taxpayers have, therefore, clearly established a record supporting the decline in value of the tract which they claimed. Treating the casualty as a partial sale — that is, as equivalent to a sale of an estimated amount of timber destroyed — has the effect of unrealistically limiting the property involved in the casualty and excluding from consideration a number of significant consequences which must be taken into account if the taxpayers are to receive the full relief with respect to their economic loss Congress intended.
*507Peo Rata Teeatment op Casualty Losses
A. Prior Treatment
In addition to the weaknesses of the majority’s theory noted above, the majority opinion also fails to consider the previous policy of Internal Revenue in administering the casualty loss provision and the case law which developed in relation to that policy. As will be seen below, pro rata treatment for casualty loss has been held to deny the full deduction Congress intended and, subsequently, Internal Revenue abandoned its application. The taxpayers contend that the Commission in the present case permits deduction for only a fraction of the loss actually sustained, which allegedly amounts to such pro rata treatment repudiated by the Courts as well as by Internal Revenue.
Initially, the Commissioner applied a “percentage-of-basis” rule with support from some early cases in the Board of Tax Appeals. Fred Frazer, 10 B.T.A. 409 (1928); G.C.M. 6122, VIII-2 C.B. 115 (1929); Harry Johnston Grant, 30 B.T.A. 1028 (1934). Under this percentage formula, the amount allowable as a deduction was limited to a percentage of the taxpayers’ basis which equaled the ratio between the decrease in value after the casualty and the value of the property immediately before the casualty.8
Subsequently, however, the percentage-of-basis rule was dropped in determining the amount of an allowable casualty loss in respect to non-business property. Instead of pro rata treatment, the deduction allowable became the lesser of (1) the difference between the value of the property immediately before and immediately after the casualty, or (2) the adjusted basis for determining the loss from the sale or other disposition of the property. G.C.M. 16255, XV-1 C.B. 115 (1936).
This full deduction approach was ratified by the Supreme Court in Helvering v. Owens, 305 U.S. 468, 59 S.Ct. 260, 83 L.Ed. 292 (1939), where the Court applied the formula to an automobile partially damaged by fire. The Court neld that Congress intended the amount deductible to be the actual loss sustained, limited by the adjusted basis of the property. Id. at 471, 59 S.Ct. 260.9 As the Commissioner concedes, the rationale of the Court in Owens cast doubt on the percentage-of-basis formula. Commissioner’s Brief at page 18. It is evident that the validity of the analogy to partial sale, which is at the heart of the percentage-of-basis rule, was also undermined. Following the Owens decision, Internal Revenue applied this full deduction rule to non-business real estate not held for investment, holding that the maximum loss allowable was the adjusted basis of the entire property. G.C.M. 21013, 1939-1 C.B. 101.
During this period the Commissioner did not require allocation of the taxpayers’ basis between land and improvements. Subsequently, a requirement that basis be allocated between land and buildings was imposed. United States v. Koshland, 208 F.2d 636 (9th Cir. 1953), firmly established allocation for business property. It is now recognized that a taxpayer must allocate his basis between depreciable fruit trees and the land on which they stand, Carloate Industries, Inc. v. United States, 354 F.2d 814 (5th Cir. 1966). The same is true for depletable timber, see Estate of Sam E. Broadhead, 25 CCH T.C.M. 133 (1966), *508aff’d on other issues, 391 F.2d 841 (5th Cir. 1968).
Despite the fact that the Supreme Court’s rationale in Owens weakened the continued validity of pro- rata treatment, and even though it had been discarded as to non-business property, G.C.M. 16255 and 21013, the Commissioner continued to apply the percentage-of-basis formula to business property where basis had been allocated between land, structures and other improvements. For example, while basis had to be allocated between a building and the land on which it stood, the Commissioner continued to limit the allowable casualty loss deduction for damage to the building only to a percentage of the building’s basis.
But in Frank R. Hinman, 12 CCH T.C. M. 1347 (1953), the Tax Court failed to apply the percentage formula to a partially damaged farm. The taxpayers in Hinman suffered a loss from a flood which rendered valueless for farming 58 percent of their 264.8 acres. In authorizing a deduction of their entire $12,875 basis, the Court made no suggestion that a pro rata or percentage deduction was required — that is, to permit a deduction of only 58 percent of their $12,875 basis —or that the loss should be treated as a pro tanto disposition or sale of acreage rendered unprofitable by the flood.
However, two years later in Bessie Knapp, 23 T.C. 716 (1955), the Tax Court did apply the percentage-of-basis rule to citrus orchards damaged by a two-day freeze. The taxpayer there was only allowed a deduction for a percentage of the adjusted basis of the orchard, which percentage equalled the ratio of the decrease in value resulting from the freeze and the value before the freeze. The Commissioner thereafter pressed for the application of a pro rata rule for partial casualty losses, until Alcoma Ass’n, Inc. v. United States, 239 F.2d 365 (5th Cir. 1956).
In 'Alcoma the taxpayer claimed a deduction on account of hurricane damage to a citrus grove. The storm had caused a decrease of $191,000 in the value of the grove, which amounted to 12 percent of the value of the grove before the hurricane. The adjusted basis of the grove before the storm was approximately $523,000. The taxpayers claimed a deduction for the full $191,000, but the Commissioner, relying on Bessie Knapp, supra, sought to allow only a pro rata deduction, namely, 12 percent of the taxpayer’s $523,000 adjusted basis, or some $63,700. The District Court accepted the Commissioner’s formula.
Shortly after the District Court’s approval of the Commissioner’s method, the Treasury issued a proposed regulation adopting the percentage-of-basis formula.10 However, on appeal the Fifth Circuit rejected the formula and the partial sale analogy is inconsistent with the Supreme Court decision in Owens and with Congressional policy to allow deduction for the full amount of uncompensated losses. The Court, unanimously reversing the District Court, stated:
* * * this question has not been left entirely open. The Supreme Court's decision in Helvering v. Owens * * has explicitly determined that allowable casualty loss is to be the actual decrease in the market value of the property, measured by the difference in market values immediately before and immediately after the casualty, but limited to the total adjusted basis of the property. Id. at 367.
*509No appeal from this decision was taken by the Commissioner.
Thereafter, in October 1959 the regulations rejected by Alcoma were withdrawn and new proposed regulations were issued. These were later adopted on January 15, 1960 and became Section 1.165-7(b) (1) of the Regulations. As indicated previously, they provide in substance that the amount of the deductible loss as to both business and non-business property is the full economic loss sustained within the limits of the adjusted basis of the property. As to business property totally destroyed by a casualty, the amount deductible is the adjusted basis of such property even if the fair market value before the casualty is less than its adjusted basis.
The history of the Commissioner’s treatment of partial casualty losses makes it apparent that, having pressed unsuccessfully for pro rata treatment, the Commissioner abandoned the percentage-of-basis formula as repugnant to Congressional intent and adopted regulations permitting deduction for the full amount of the loss suffered, within the confines of the taxpayer’s adjusted basis.
B. The Present Rule
In the present case, the Commissioner determined the casualty loss deduction by multiplying the depletion unit, $3.64 per 1.000 board feet, by the estimated 4,-757.000 board feet destroyed, the proper method for determining the depletion deduction under Section 611. The deduction was computed to be $17,315.11 As the amici point out, and the Commissioner concedes, if the percentage-of-basis rule were applied to the taxpayers’ tract of timber instead, the mathematical result would be substantially the same.12 Thus the application of the Commissioner’s present rule leads to the same pro rata treatment arrived at by use of the percentage-of-basis formula, although admittedly by a different route.
The Commissioner insists, however, that this demonstration “does not impeach the new rule any more than it establishes that the old rule, as applied to timber owners, is a fair and workable method.” The Commissioner states that the issue is “whether the application of the present rule is so irrational that it cannot be tolerated.”
*510The real question, however, is whether the Commissioner’s position is inconsistent with the statute. As noted, the percentage-of-basis rule was rejected in Alcoma as contrary to the statute, and the regulations authorizing that formula were withdrawn. In view of the conclusion reached in Alcoma that pro rata treatment was without analytical or statutory support and inconsistent with Congressional policy allowing full deduction for partial casualty losses, which conclusion was based on the Supreme Court’s decision in Owens, I see no reason why the identical result should now be viewed differently.
The Regulations
Notwithstanding the arguments above, the Commissioner asserts that the regulations require that petitioners’ deductions be limited to the depletion deduction authorized by Section 611. Given the technical and intricate nature of the tax provisions, as well as the fact that Congress has delegated to the Secretary of the Treasury (or his delegate), under Section 7805(a) of the Code, the power to prescribe “needful rules and regulations” for the enforcement of the Code, the Commissioner argues that appropriate weight should be given to his interpretation of the casualty loss provision because of his administrative expertise. However, because the majority opinion does not even refer to the regulations under the casualty loss provision, the majority impliedly recognize that the Commissioner’s own regulations not only fail to support him, but in fact undermine his position. The implication is justified on a reading of the relevant regulations under Section 165.
The Commissioner claims that Section 1.165-7(b) (2) of the regulations supports his position. The validity of the regulation has been upheld in Carloate Industries, supra. The regulation elaborates the method of calculating the allowable loss deduction. It provides:
(2) Allocation of property for computing loss.
(i) A loss incurred in a trade or business or in any transaction entered into for profit shall be determined under subparagraph (1) of this paragraph by reference to the single, identifiable property damaged or destroyed. Thus for example, in determining the fair market value of the property before and after the casualty in a case where damage by casualty has occurred to a building and ornamental or fruit trees used in a trade- or business, the decrease in value shall be measured by taking the building and trees into account separately, and not together as an integral part of the realty, and separate losses shall be determined for such building and trees.
It is evident that loss shall be measured by taking buildings and trees into account separately. Thus a building is one property and trees are separate property. The Commissioner maintains that the “single, identifiable property damaged or destroyed” in the instant case is each separate tree that was damaged or destroyed and which has an adjusted basis of its own, measured in board feet. Therefore, he asserts that each injured tree must be considered apart from undamaged trees.
However, far from assisting the Commissioner, the regulation itself makes no such distinction. The regulation does not differentiate between fruit or ornamental trees which were damaged and those which were spared. In fact, it is apparent that the regulation treats all the trees as a unit or as the “identifiable property,” separate from land or buildings. It directs that “separate losses shall be determined for such building and trees.” The Commissioner thus asserts a distinction between damaged and undamaged trees when his own regulations do not so distinguish. Further, these very regulations were proposed for the purpose of making Internal Revenue’s policy consistent with Owens and with Alcoma, and Alcoma made no distinction between damaged and undamaged trees in a citrus grove.
*511The Commissioner seems to recognize the merit in this point because he explicitly allowed the $1,906 loss deduction claimed by petitioners for the value of the plantations. The $1,906 represented destruction of 10 percent of the tract’s plantations. This deduction was permitted without differentiation between damaged and undamaged plantations. No explanation is given for this allowance, but a serious inconsistency in the Commissioner’s position is evident. That is to say, the Commissioner distinguishes in this case between damaged and undamaged saw timber, pulpwood and young growth, while allowing the full deduction of loss to plantations without making the same distinction between damaged and undamaged plantations.13
Since there is nothing in the statute or regulations which gives each tree an adjusted basis of its own, I agree with the petitioners and the amici that the “single, identifiable property damaged or destroyed” must be the entire timber tract, and the adjusted basis of the whole tract must be the limiting amount for a casualty deduction in Section 165 (b) and § 1.165-7(b) of the regulations.
Discriminatory Treatment
To sustain the Commissioner’s position would be to sanction discriminatory treatment of casualty losses with respect to timber owners. Under the present rule, timber owners are entitled to deduct only a fraction of casualty loss suffered. But in Frank R. Hinman, supra, owners of a farm were permitted to deduct the full extent of a partial loss of their land due to flooding, although such a deduction eliminated all their basis in the farm. Likewise, where an improvement to land is partially destroyed by a casualty, the taxpayer is also permitted to deduct the full extent of his uncompensated loss within the limits of his adjusted basis in the entire improvement. United States v. Koshland, supra; Reg. § 1.165-7(b) (3), Example 2. Similarly, owners of shrubbery and ornamental or fruit trees are permitted to deduct the full extent of loss, limited by the adjusted basis in the shrubbery and trees. Reg. § 1.165-7(b) (3), Example 2. The owner of a citrus grove is also entitled to deduct the full extent of his loss so long as such deduction does not exceed the adjusted basis of the entire grove. Ahorna, supra. See footnote 13.
It was argued in Ahorna that to permit the taxpayer a full deduction of his loss would give- him a windfall because he would be allowed a tax-free benefit on the appreciated value of his property. Since the damage could not be repaired, the taxpayer would allegedly have been entitled to deduct losses against the appreciated value of the tract, without having incurred any out-of-pocket expenditures. In response the Court stated:
Finally the Commissioner objects that the taxpayer’s formula in effect allows him to take losses against anticipated profits from the appreciation of his property, for which he has as yet paid no taxes. This argument is deceptive. The only real amount is the out-of-pocket loss suffered by the taxpayer; this loss might indeed be larger than otherwise because of the (as yet untaxed) appreciation in the value and *512cost of the property, but it is nevertheless a real loss. This loss can in any event be deducted only to the extent of the original investment reduced by the previously allowed depreciation. The appreciation can still be taxed when and if actually realized; if the property should later depreciate before it is sold it is the taxpayer who is ultimately injured by having suffered his loss at the time when prices and presumably replacement costs were high —he should not be penalized taxwise because he “realized” his “profits” through involuntary conversion at a time when prices happen to be high. Id. 239 F.2d at 370.
Therefore, since farmers and owners of citrus groves, improved real estate, shrubs and trees are entitled to deduct the full extent of casualty loss, limited by the adjusted basis in the entire farm, in the entire grove, in the entire improvement and in all the trees and shrubs, it seems reasonable and proper that timber tract owners be afforded the same treatment.
The majority contend that the farm, citrus grove and the special trees and shrubs cases are distinguishable from timber in an important respect, namely, that trees in the present case are cut and sold in units as end products. However, the Commissioner treats partially destroyed farm land as single property, even though land is obviously divisible into parcels without necessarily adversely affecting the value of the whole farm. Moreover, nothing is in the record and there is nothing in the common experience of federal judges which clearly indicates that fruit or ornamental trees, shrubs or other greenery cannot reproduce and, in fact, are not reproduced, on a self-generative basis and sold as end products. Certainly land is sold as an end product. If that be true, any distinction between timber and the above must be entirely speculative.
The argument by the majority that the taxpayers are no worse off under the Commissioner’s rule than they would be in the event of total loss of all timber on the tract is not dispositive of anything. There is no dispute that the basis of the whole timber tract establishes the limit for a casualty loss deduction if there is a total loss. However, the present case involves, as the majority concede, a partial casualty loss situation. Where a farm is partially ruined by a flood, taxpayers are entitled to a deduction which may completely eliminate their basis, although part of the farm land is still usable. This is what occurred in Hinman, supra, and the Commissioner makes no argument that Hinman is wrong. The Commissioner offers no satisfactory rationale why the taxpayers here should not be accorded the same treatment.
Finally, the purpose of the casualty loss provision in the Code is to permit deductions for uncompensated loss. Timber is perhaps the classic case for application of this provision. Insurance against losses to standing timber from ice, fire, windstorm or other casualty is generally unavailable in the United States. Each timber owner is forced to bear the full brunt of such loss. See H. Chapman & W. Meyer, Forest Valuation, 349-54 (1947). If timber owners are not permitted deduction for loss to immature growth, then they must bear the decrease in value of their property without any effective offset. Yet Congress expressed its intention that casualty losses be allowed as a deduction against ordinary income to the full extent of loss. Consistent with this view, Congress determined in the 1858 amendment to Section 1231 that the deduction for casualty loss was not to be reduced or minimized by reason that timber was entitled to capital gain treatment as Section 1231 property.
The Harper case, supra, relied on by the Commissioner and the majority involved a question quite similar to that involved here; whether the taxpayer was entitled to treat as the maximum limit of the casualty loss deduction the adjusted basis of the timber standing on each tract, or whether, as contended by the Commissioner, the deduction was *513limited to the amount of the depletion deduction per board foot of the estimated timber lost. In that cáse five tracts of timber were damaged by a hurricane. In a suit for a tax refund, rather than making a claim for a deduction with respect to the decline in value of the timber tracts, the taxpayer stipulated the amount and value of the timber physically destroyed. The District Court held, in effect, that the taxpayer had precluded consideration of the decline in value of the tract attributable to the storm because he had stipulated that his loss consisted of a specified number of board feet of damaged timber. 274 F.Supp. at 810-812. If there was any damage to young growth and plantations, the Court was not apprised of it. Here, as the Tax Court found, the record clearly established the amount of the decline in value of the tract and provides a satisfactory basis for allowing a deduction for the full economic loss.
The Court in Harper premised its conclusion on the analogy to partial sale, which leads to pro rata treatment for casualty loss to a timber tract and which is inconsistent with Congress’ intention to allow deduction for the full amount of the loss sustained. The decision also distinguished the Alcoma case essentially on the ground that “there may well be a distinction between timber, grown for resale and a citrus grove, not developed for sale itself and not growing in value, but intended to produce products for resale,” 274 F.Supp. at 812. The District Court also stated that Alcoma could be distinguished on the ground that the Alcoma court itself offered a number of possible distinctions between that case and the Supreme Court decision in Owens, on which Alcoma relied. The suggested distinction, relied upon by the District Court in Harper and by the majority here was that Owens involved a single car which could not be destroyed piece by piece without affecting the utility of the whole, thus indicating an indivisible “basis,” whereas the citrus grove in Alcoma contained trees which were damaged and those which were not, thus indicating a possible matching of basis to trees which were lost and those which were spared. However, the Court in Alcoma stated that it did not consider this possibility because it was not urged by the Commissioner; nor did it say that it would sustain such a distinction and the implication was that it would not. Moreover, as indicated above, damage to the timber tract cannot realistically be divided into component parts because the loss of immature growth must be treated as damage to the tract of timber itself.
In Harper, the taxpayer claimed a loss for only a specified number of board feet of saw timber. In the present case, the petitioners claim a deduction for casualty loss to the entire timber tract. On the facts of this case, determining loss by the method outlined by petitioners and amid is not only more equitable, but also within the intendment of the statute.
In sum, the casualty loss provision enacted by Congress authorizes full deduction for uncompensated losses, but not exceeding the basis of the property damaged or destroyed. In 1951 and 1956 the taxpayers purchased a tract of timber which they have managed and depleted as a single unit. They did not, as contended by the Commissioner and the majority, buy an estimated number of trees or even a specified amount of board feet of timber. Their basis in the tract is, therefore, the limit on their deduction. The taxpayers claim no more than this. The regulations under the loss provision support this conclusion. Furthermore, the Commissioner’s treatment of the plantations, allowing full deduction for partial loss, supplies even more persuasive support that taxpayers are entitled to full deduction for loss to larger trees. Additionally, the history of the percentage-of-basis formula, its rejection by the Fifth Circuit and in Alcoma and its. abandonment by Internal Revenue certainly tend to establish that pro rata treatment for partial casualty loss is contrary to the intention of Congress. Yet the Commissioner concedes that if the repudiated formula were ap*514plied to the present case, the mathematical result would be the same. If the effect of the percentage-of-basis formula violates the statute, the identical result must surely also be inconsistent with it. But even more indicative of the arbitrariness of the Commissioner’s tax treatment here is that it is irreconcilable with tax treatment of similar property, namely, citrus groves, farms, shrubs and fruit or ornamental trees. The Harper decision is distinguishable; but in any case we are not bound by it and I would choose not to follow it.
The decision of the Tax Court should be reversed and the case remanded for further proceedings.
. Saw timber consists of trees which are 8 inches or more in diameter at breast height. See footnotes 2, 3 and 4, infra. The saw timber is the only timber relied upon by the Tax Court.
. Pulpwood consists of trees at least 4 inches but less than 8 inches in diameter at breast height.
. Young growth consists of trees less than 4 inches in diameter at breast height.
. Plantations are seedlings or trees less than 3 feet in height, planted by the taxpayers. The value of all the plantations on the tract was $19,060. Joint Appendix, p. 104.
. “The depletion unit of timber for a given timber account in a given year shall be the quotient obtained by dividing (i) the basis provided by section 1012 and adjusted as provided by section 1016, of the timber on hand at the beginning of the year plus the cost of the number of units of timber acquired during the year plus proper additions to capital, by (ii) the total number of units of timber on hand in the given account at the beginning of the year plus (or minus) the number of units required to be added (or deducted) by way of correcting the estimate of the number of units remaining available in the account. The number of units of timber of a given timber ac*502count cut during any taxable year multiplied by tlie depletion unit of that timber account applicable to such year shall be the amount of depletion allowable for the taxable year.” Reg. § 1.611-3 (b) (2).
. This regulation is “applicable to any taxable year beginning after January 16, 1960.” Reg. § 1.165-7 (e). Petitioners make a token resistance to the application of this provision to them because the taxable year at issue on this appeal began prior to January 16, 1960. However, the amici concede and we agree that the regulations and, especially the phrase “single, identifiable property damaged or destroyed,” are merely interpretative of the statute. Since they are consistent with the statute, they are applicable to the calendar year 1960.
. 48 T.O. at 527.
. Percentage-of-basis formula can be simply stated in the following terms:
Decrease in Value due to Amount deduetible=Adjusted basis X casijalty as a casualty loss Value before casualty
. In the Owens case the adjusted basis of the car was in excess of the market value of the car before the accident.
. The pertinent provisions in the proposed regulation are that “[i]n the case of a casualty loss incurred in a trade or business, or in connection with any transaction entered into for profit, where the destroyed or damaged property has at all times been devoted to business or income-producing purposes in the hands of the taxpayer, the deductible loss will be the proportion of the adjusted basis determined under section 1011 which the value of the destroyed property bears to the value of the entire property, reduced by an insurance or other compensation received in respect of the property.” Prop. Reg. § 1.165-3(c), 21 Fed.Reg. 4925, 4927 (July 3, 1956). See footnote 8, supra.
. Simply stated the calculations are:
Present Deduction for Casualty Loss Unit for v Timber Destroyed depletion •*' (in board feet)
$3.64 1,000 board feet X 4,757,000 board feet = $17,315
$212,476 58,445,000 board feet 4,757,000 X board feet $17,315
. Simply stated, the calculations are (see, footnote 8):
4.757.000 board feet* 58.445.000 board feet $212,476=$17,315
The value of the tract before the storm does not appear in the record, and it is, therefore, not possible to make the precise computation. The use of the quantity of saw timber rather than the value of the tract in the computation should produce approximately the same answer; any difference in result is due to the fact that the depletion rate is uniform for each board foot of timber on the tract even though the value of the timber varies by species and accessibility and to the further fact that losses to young growth and the effect on the value of the remaining timber is not, under the Commissioner’s rule, included in the computation. The point remains true, however, that the Commissioner’s approach permits a deduction for only a part of the loss sustained by the taxpayer.
. The Commissioner, in construing the casualty loss provision with respect to orchards, has also continued to regard the orchard, and not each tree in the orchard, as the “identifiable property.” This can be seen from the 1967 edition of the Farmer’s Tax Guide, IRS Publication No. 225:
“Obchabds, Tbees ob Shbubs. When a loss occurs to farm property, the casualty will be determined by reference to the identifiable property damaged. If damage occurs to a farm building and to an orchard, both of which are a part of the same realty, the loss in value must be measured by taking each into account separately and a separate loss will be determined for the building and for the orchard.” At pages 49, 50.
The Commissioner has also treated hurricane damage to a citrus grove by permitting deduction for the full loss within the limits of the adjusted basis and, therefore, without distinguishing between injured and uninjured trees. See Revenue Ruling 68-531, I.R.B. 1968-41, 10.