- 21 -
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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