Lakewood Associates, Robert G. Moore, Tax Matters Partner - Page 9

                                                - 9 -                                                 

            unable to obtain a permit for development of the Elbow Lake                               
            property under the 1989 Manual requirements.  As a consequence,                           
            Lakewood did not want to incur the expense of completing the                              
            permit application.                                                                       
                  In 1991, the Corps ceased use of the 1989 Manual per                                
            statutory requirements in the Energy and Water Development                                
            Appropriations Act of 1992, Pub. L. 102-104, 105 Stat. 510                                
            (1991).  As of September 1991, the Corps reverted to using the                            
            1987 Manual, which became mandatory for local divisions of the                            
            Corps.  All permit applicants with applications pending at that                           
            time and subject to the 1989 Manual were given the option to                              
            resubmit their applications under the 1987 Manual.  Lakewood met                          
            with representatives of the Corps in 1992 and 1993 regarding                              
            delineation of wetlands on the Elbow Lake property under the 1987                         
                  Lakewood's adjusted basis in the Elbow Lake property was                            
            $13,268,320.  On its 1989 income tax return, Lakewood treated the                         
            issuance of the 1989 Manual as a regulatory taking, or                                    
            condemnation, of the Elbow Lake property and claimed an ordinary                          
            loss deduction under sections 165 and 1231(a) with respect to the                         
            property in the amount of $9,849,682.  The amount of the claimed                          
            loss deduction represents approximately 74 percent of Lakewood's                          
            adjusted basis in the property, which is the portion of the Elbow                         
            Lake property determined to be protected wetlands under the 1989                          

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011