Lakewood Associates, Robert G. Moore, Tax Matters Partner - Page 11

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          reasonable prospect of recovery, no loss may be reported until it           
          can be ascertained with reasonable certainty whether or not such            
          reimbursement will be received.  Section 1.165-1(d)(2)(i), Income           
          Tax Regs., further provides that 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.                                             
               Respondent argues that, assuming Lakewood suffered a                   
          "taking" in this case, Lakewood necessarily possessed a                     
          "reasonable prospect of recovery" as contemplated under section             
          1.165-1(d)(2)(i), Income Tax Regs.  Relying on affidavits                   
          executed by Lakewood's environmental engineering consultants,               
          petitioner counters that, by virtue of COE's method of operation,           
          there is a genuine issue of fact whether Lakewood's property was            
          taken in such a manner as to eliminate any reasonable prospect of           
          recovery.                                                                   
               While there is a certain allure in the fundamental logic               
          underlying respondent's argument, on the whole we find                      
          respondent's position to be overly simplistic.  It is beyond                
          peradventure that the Federal Government is obliged to provide              
          just compensation where private property is taken within the                
          meaning of Fifth Amendment.  See, e.g., Lucas v. South Carolina             
          Coastal Council, 505 U.S. 1003 (1992).  Nevertheless,                       
          respondent's abstract concession that Lakewood suffered a                   





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