John J. Reichel - Page 9




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          property"(emphasis added).  S. Rept. 99-313, at 140 (1986), 1986-           
          3 C.B. (Vol. 3) 1, 140.                                                     
               In sum, petitioner has conceded that although development of           
          the San Bernardino parcels was deferred by adverse economic                 
          conditions, he acquired and held those parcels intending to                 
          develop (i.e., produce) them.  Because the real estate taxes at             
          issue are expenses petitioner incurred that are allocable to                
          those properties, he must capitalize those expenses under section           
          263A.                                                                       
               In reaching our conclusion herein, we have considered all              
          arguments made by petitioner for a contrary result, and, to the             
          extent not mentioned above, find them to be irrelevant or without           
          merit.  To reflect respondent's concessions,                                
                                                  Decision will be entered            
                                             under Rule 155.                          





















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