Lakewood Associates, Robert G. Moore, Tax Matters Partner - Page 21

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            could have been developed in an economically feasible manner.                             
            Mr. Goode's testimony was corroborated by the other expert                                
            witnesses who testified that it would be "virtually impossible"                           
            to obtain a section 404 permit or to develop the Elbow Lake                               
            property after the 1989 Manual.  Conversely, petitioner's experts                         
            also believed that Lakewood could have obtained a section 404                             
            permit under the terms of the 1987 Manual and could have                                  
            developed the Elbow Lake property for residential purposes in an                          
            economically feasible manner.  Petitioner has not argued that                             
            Lakewood could not use the Elbow Lake property for agricultural                           
            use because of the terms of the 1989 Manual and the MOA or that                           
            the Federal regulations affected Lakewood's use in any way other                          
            than preventing real estate development.  Petitioner has chosen                           
            not to argue that there was a partial regulatory taking of the                            
            Elbow Lake property that would constitute a realization event for                         
            the loss in value of the property.  Moreover, petitioner's own                            
            expert witness testified that the property was not worthless as                           
            agricultural property after 1989.  Accordingly, we find that                              
            Lakewood is not entitled to the loss deduction claimed.5                                  
                  On July 10, 1997, after the briefs were filed in this case,                         
            respondent filed a motion to reopen the record to permit the                              

                  5 Although we are not factually compelled to address the                            
            question of whether the Federal wetland regulations cause a tax                           
            recognizable event, it appears that the result would be no                                
            different from that of a zoning limitation.                                               

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