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make a section 333 election. Accordingly, petitioners must
recognize the gain relating to MOC's liquidation.
III. Abandonment Loss
Respondent disallowed petitioners' 1988 abandonment loss
because petitioners failed to establish that MOC abandoned the
wave pool equipment in that year. Section 165(a) permits a
deduction for any loss sustained during the taxable year that is
not compensated for by insurance or otherwise. To be entitled to
an abandonment loss, petitioners must prove an intent to abandon,
coupled with an act of abandonment. See Massey-Ferguson, Inc. v.
Commissioner, 59 T.C. 220, 225 (1972). The loss is allowed for
the year in which the act of abandonment takes place. See sec.
1.165-1(d)(1), Income Tax Regs.
MOC may have abandoned the wave pool equipment in 1984
(i.e., the year MOC dismantled, moved, and attempted to sell the
equipment) but did not abandon the equipment in 1988--the year
the loss was reported. Accordingly, petitioners are not entitled
to an abandonment loss.
All other contentions are irrelevant or moot.
To reflect the foregoing,
Decision will be entered
for respondent.
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