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provided a delineation of wetlands to the Corps as required for
the permit, and the Corps confirmed the delineation. These
actions show that Lakewood has not abandoned the property. The
property has continued to be held by Lakewood for future use or
sale. We hold that there was not a loss realization event with
respect to the zoning laws.
To characterize the loss as ordinary under section 1231,
petitioner at very least, would have to show that land use
regulations constitute an involuntary conversion. Section
1.1231-1(e), Income Tax Regs., defines involuntary conversion of
property as follows:
the conversion of property into money or
other property as a result of complete or
partial destruction, theft or seizure, or an
exercise of the power of requisition or
condemnation, or the threat or imminence
thereof. Losses upon the complete or partial
destruction, theft, seizure, requisition, or
condemnation of property are treated as
losses upon an involuntary conversion whether
or not there is a conversion of the property
into other property or money * * *
Government land use regulations, such as local zoning law or
Federal wetland regulations, rarely constitute a condemnation of
property under eminent domain powers. See Lucas v. South
Carolina Coastal Council, 505 U.S. 1003 (1992); United States v.
Riverside Bayview Homes, Inc., 474 U.S. 121 (1985); Agins v. City
of Tiburon, 447 U.S. 255 (1980). Condemnation requires property
to be taken against the taxpayer's will by a public or quasi-
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