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land for residential development because of the Federal
wetland regulations.
Held: There has not been a realization event that
fixes the decrease in property value in a closed and
completed transaction, and L is not entitled to a loss
deduction under sec. 165(a), I.R.C.
Douglas E. Kahle, for petitioner.
John C. McDougal, for respondent.
GERBER, Judge: Respondent issued a notice of final
partnership administrative adjustments to Lakewood Associates for
taxable year 1989. The issue for our consideration is whether
Lakewood Associates is entitled to a loss deduction under section
1651 in 1989 for a decrease in the value of real property alleged
to have been caused by restrictions imposed on its ability to
develop the property by Federal wetland regulations that were
issued in that year.2
FINDINGS OF FACT3
Lakewood Associates (Lakewood) is a Virginia general
partnership with its principal place of business in Virginia
1All section references are to the Internal Revenue Code in
effect for the year in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure, unless otherwise
indicated.
2In an earlier opinion, respondent’s motion for summary
judgment was denied. See Lakewood Associates v. Commissioner,
T.C. Memo. 1995-552.
3The parties’ stipulation of facts and the attached exhibits
are incorporated by this reference.
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