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to the property owner. Rather, we hold that until the Elbow Lake
property is sold, abandoned, or otherwise disposed of in a
completed transaction, Lakewood is not entitled to a loss
deduction. Until such a time, it is impossible to determine
accurately whether in fact Lakewood suffered a loss on the
property or the amount of the loss. Because Lakewood continued
to own the property, there was not a closed and completed
transaction with regard to the Elbow Lake property in 1989 that
triggered loss recognition for the $9 million decline in value.
Moreover, allowing Lakewood to deduct the diminution in
value caused by land use regulations would be inconsistent with
the other grounds for a loss deduction that exist under section
165; i.e., abandonment and obsolescence. Section 165 provides
for a loss deduction for obsolescence of nondepreciable property
used in a trade or business where the property is permanently
discarded from use by the taxpayer. Sec. 1.165-2, Income Tax
Regs. In addition, a deduction is permitted for an abandonment
loss where the taxpayer intends to abandon the property and has
taken an affirmative act of abandonment. Citron v. Commissioner,
97 T.C. 200, 208 (1991). Lakewood has not permanently discarded
or abandoned the Elbow Lake property. Rather, Lakewood filed a
permit application in January 1991, after the year in issue. In
1992, Lakewood renewed discussions with the Corps regarding the
determination of wetlands on its property. In 1993, Lakewood
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