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otherwise allowable loss in the year the loss occurred."
Petitioner filed a response and a supporting memorandum of law in
opposition to respondent's motion.
Discussion
The issue for decision is whether, assuming the application
of the Wetlands Manual effected a "taking" of Lakewood's
property, respondent is entitled to summary judgment that
Lakewood is nonetheless precluded from reporting a loss relating
to such event on the ground that it possessed a claim for
reimbursement from the Federal Government with respect to which
there was a reasonable prospect of recovery.
Section 165(a) states the general rule that a deduction may
be reported for any loss sustained during the taxable year and
not compensated for by insurance or otherwise. Section 1.165-
1(d)(2)(i), Income Tax Regs., which concerns the year in which a
loss deduction may be reported, provides:
If a casualty or other event occurs which may result in
a loss and, in the year of such casualty or event,
there exists a claim for reimbursement with respect to
which there is a reasonable prospect of recovery, no
portion of the loss with respect to which reimbursement
may be received is sustained, for purposes of section
165, until it can be ascertained with reasonable
certainty whether or not such reimbursement will be
received. Whether a reasonable prospect of recovery
exists with respect to a claim for reimbursement of a
loss is a question of fact to be determined upon an
examination of all facts and circumstances. Whether or
not such reimbursement will be received may be
ascertained with reasonable certainty, for example, by
a settlement of the claim, by an adjudication of the
claim, or by an abandonment of the claim. When a
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