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loss, where the taxpayers decided not to file a claim with the
insurance company for fear that the policy would not be renewed.
Relying on the reasoning underlying our decision in Hills,
petitioner contends that Lakewood is not required to seek a
judicial remedy as a prerequisite to recognizing the loss in
question.
Finally, petitioner maintains that respondent's motion
should be denied on the ground that Lakewood's prospects of
recovery against the Federal Government are speculative at best.
In short, petitioner asserts that Lakewood would have to apply to
COE for a permit to develop the regulated wetlands and have that
application denied before being permitted to commence an action
in the U.S. Court of Federal Claims. Petitioner further contends
that he is prepared to prove at trial that, based upon current
COE practices, Lakewood's permit application might never be
formally denied, thus denying Lakewood access to the Court of
Federal Claims.
Based upon our review of the pleadings and the other
materials making up the record in the case, and having fully
considered the parties respective positions, we are persuaded
that respondent's Motion for Summary Judgment should be denied.
Section 1.165-1(d)(2)(i), Income Tax Regs., provides that when an
event occurs that may result in a loss, yet there exists a claim
for reimbursement on the loss with respect to which there is a
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