Lakewood Associates, Robert G. Moore, Tax Matters Partner - Page 20

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           public entity exercising the power of eminent domain.  Koziara v.                          
           Commissioner, 86 T.C. 999, 1006-1007 (1986), affd. 841 F.2d 1126                           
           (6th Cir. 1988).  A condemnation or involuntary conversion of                              
           property as defined under section 1231 has not occurred in this                            
                  Considering the question of the effect of the 1989 Manual                           
           and the MOA, it was possible that they adversely affected the                              
           value of the Elbow Lake property for agricultural use, causing a                           
           reduction in value of the property below the $1 million                                    
           determined by petitioner's expert.  Petitioner, however, only                              
           argues that the newly issued Federal wetland regulations                                   
           prevented Lakewood's use of the Elbow Lake property for                                    
           residential development and contends that the value of the land                            
           is $1 million based on agriculture as the highest and best use of                          
           the property.                                                                              
                  At trial, petitioner presented four wetlands experts who                            
           provided credible and convincing testimony that it was highly                              
           unlikely that Lakewood would be granted a section 404 permit by                            
           the Corps to develop single-family residences on the Elbow Lake                            
           property.  One expert, Bernard Goode, who was employed as an                               
           engineer by the Corps for 34 years, believed that there was a                              
           "very low likelihood" that under the 1989 Manual, the Corps would                          
           grant a section 404 permit to Lakewood for the proposed                                    
           residential development or that Lakewood's residential project                             

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