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demolishing an existing building, either immediately or
subsequently, the entire basis of the property is allocated to
the land, increased by the net cost of demolition, and no loss is
allowed for the demolition of the building. Sec. 1.165-3(a)(1),
Income Tax Regs.; Estate of Wilson v. Commissioner, T.C. Memo.
1990-514, and cases cited therein. The rationale for this is
that if a taxpayer buys property with the intention of
demolishing a building, the building can have no value to the
taxpayer and its demolition causes the taxpayer no loss. Ivey v.
Commissioner, 423 F.2d 862, 864 (2d Cir. 1970), affg. 52 T.C. 76
(1969).
Section 170(c) permits a deduction for a charitable
contribution to a State or political subdivision thereof,
provided the gift is made for exclusively public purposes.
Osborne v. Commissioner, 87 T.C. 575 (1986). However, the
measure of a charitable contribution of property is the fair
market value of such property. Withers v. Commissioner, 69 T.C.
900, 902 (1978).
We reject respondent's contention that petitioner intended
to demolish the house when he purchased it some 14 months before
he gave it to the City of Columbus, Department of Recreation and
Parks. The provisions of section 1.165-3, Income Tax Regs., are
inapplicable in these circumstances for two reasons. First, the
regulation applies only if the purchaser has the intent to
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