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deemed to have conceded paragraph 8(l) of the petition which
states:
The possibility of recovery on a case brought
before the United States Claims Court is speculative
and the potential existence of a legal right to bring
such a claim is not the equivalent of an insurance
policy which serves to reduce the amount of otherwise
deductible loss which has been incurred by the
Partnership.
As petitioner sees it, an admission of this paragraph is contrary
to respondent's argument that Lakewood had a guaranteed right of
reimbursement from the Federal Government.
Petitioner's second argument is that respondent's motion
should be denied on the ground that the question of whether
Lakewood enjoyed a reasonable prospect of recovery against the
Federal Government is a question of fact as opposed to a question
of law. Specifically, petitioner cites the portion of section
1.165-1(d)(2)(i), Income Tax Regs., that provides that whether a
taxpayer has a reasonable prospect of recovery with respect to an
event causing a potential loss is a question of fact to be
determined upon an examination of all the facts and
circumstances.
Petitioner's third argument is based on this Court's
decision in Hills v. Commissioner, 76 T.C. 484 (1981), affd. 691
F.2d 997 (11th Cir. 1982). In Hills, we allowed the taxpayers to
claim a theft loss of $660, notwithstanding that the taxpayers
had an insurance policy that would otherwise have covered the
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