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square footage of the Property (21,269), we calculate that the
fair market value of the Property was worth no less than
$1,634,395 on the relevant valuation date. We need not quibble
with the difference between the $1.634 million figure that we
have just calculated and the $1,837,500 award paid by the City
for the Property. Suffice it to say that the Property was in
better shape than the Flick, and it is reasonable to conclude
that the City would have paid slightly more on a square footage
basis for the Property than it did for the Flick. We find and
hold that the award is not significantly in excess of the value
of the Property. Accordingly, we also hold that none of the
award must be recognized by MIC as gain for the relevant year,
and that none of the award is includable in Beverly's gross
income.
Turning to the $65,000 contract labor expense reported by
MIC, we are persuaded that MIC can deduct this amount. We find
from the record that MIC paid $65,000 to James, Peter, and
Richard Hafiz, and that MIC paid this amount to compensate the
men for their time and efforts in connection with the City's
condemnation of the Property. In addition to the fact that the
three men performed valuable services for MIC, for which they
were entitled to be compensated, we believe that it was
reasonable for MIC to pay these men for the time that they spent
on-call to provide advisory services as needed. See
Yelencsics v. Commissioner, 74 T.C. 1513, 1524-1525 (1980). We
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