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supra at 377. Generally, we are willing to find that a threat of
condemnation has taken place if the taxpayer might reasonably
believe from representations of Government agents and from
surrounding circumstances that condemnation was likely to take
place if the taxpayer did not sell the property. Id. at 376. We
have been unwilling to find a threat, however, where it should
have appeared to the taxpayer that the chance of condemnation was
remote. Rainier Cos. v. Commissioner, 61 T.C. 68, 76 (1973),
revd. and remanded in part on another issue without unpublished
order 538 F.2d 338 (9th Cir. 1975); Warner v. Commissioner, 56
T.C. 1126, 1137 (1971), affd. without published opinion 478 F.2d
1406 (7th Cir. 1973). Whether property is converted under a
threat of condemnation is a question of fact, and petitioners
bear the burden of proof. Rule 142(a).
1. Eminent Domain
The body threatening condemnation must possess the power of
eminent domain. Under section 1033, as long as an agency could
readily obtain authority to condemn in the event that the
taxpayer refused to cooperate, actual authority to condemn is not
required at the time the threat was made. See Balistrieri v.
Commissioner, T.C. Memo. 1979-115.
Cities in California have the power of eminent domain. Cal.
Govt. Code sec. 37350.5 (West 1988); City of Needles v. Griswold,
8 Cal. Rptr. 2d 753 (Ct. App. 1992). Lancaster's ability to
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