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Also, it has been specifically held that abandonment of a
beneficial interest in a Florida land trust subject to a
nonrecourse debt may constitute a sale or exchange and may
trigger realization of gain or loss associated with an interest
in the land trust. Arkin v. Commissioner, 76 T.C. 1048, 1055-
1056 (1981). In Arkin, in 1974, the year following the
taxpayer's acquisition of an ownership interest in a Florida land
trust, the value of the underlying property associated with the
land trust declined dramatically. The taxpayer notified one of
the banks holding a mortgage loan on the underlying property and
each of the beneficiaries of the land trust of his intention to
abandon his interest in the land trust. In subsequent years,
creditors holding superior mortgages on the underlying property
foreclosed on the property and sold it at a foreclosure sale. We
held that the taxpayer's actions regarding his interest in the
land trust constituted an abandonment in 1974 of his interest in
the land trust, that such abandonment constituted a sale or
exchange, and that the loss realized constituted a capital loss
under section 165(f), not an ordinary loss deduction under
section 165(a) and (c)(2). Id. at 1053-1056.
Based on the evidence before us, we conclude that L&C
Springs' ownership interest in the L&C Properties was, for
Federal income tax purposes, effectively terminated as of
November 1, 1990. Certainly, by November 1, 1990, L&C Springs,
and all individuals associated with L&C Springs and Tanglewood
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