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destroyed Mr. Shipes' entire nursery stock because it was
suspected that such stock was infected with a bacterial disease
known as citrus canker. As a result of this condemnation, Mr.
Shipes received $8,661 (the conversion proceeds) on July 28,
1986.2
Petitioners reported the $8,661 in conversion proceeds on
their 1986 Federal income tax return. They did not, however,
make an election on that return in accordance with section 1033
to defer the gain realized with respect to the conversion
proceeds.
Sometime after July 28, 1986, an entity named Mid-Florida
Growers, Inc. (MFGI) initiated a lawsuit against SFDA in which it
sought additional compensation for the loss it incurred as a
result of the Eradication Project. That lawsuit was selected as
the test case for nursery owners affected by the Eradication
Project and was ultimately decided in MFGI's favor by Florida's
Supreme Court. See Department of Agric. & Consumer Servs. v.
Mid-Florida Growers, Inc., 521 So. 2d 101 (Fla. 1988). The State
of Florida subsequently established an administrative process by
which nursery owners affected by the Eradication Project could
file claims for additional compensation. Such claims were to be
filed with the Office of Citrus Canker Claims (the OCCC). Mr.
Shipes filed a claim with the OCCC and received $197,512.08 (the
2 Specifically, the USDA paid Mr. Shipes $6,252, and the
SFDA paid him $2,109.
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