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just 2 weeks after the cancellation of escrow on the 1996
purchase agreement.
Although a remote possibility of future use does not
necessarily preclude abandonment, Citizens Bank of Weston v.
Commissioner, 252 F.2d 425 (4th Cir. 1958), affg. 28 T.C. 717
(1957), we cannot ignore the language in section 1.165-1(b),
Income Tax Regs., that requires that substance, not mere form,
shall govern in determining a deductible abandonment loss. In
substance, FRGC’s sole business purpose was to engage in
predevelopment activities to acquire property for Flagstaff
Ranch. Although the unfavorable November 1997 zoning meeting and
cancellation of escrow on the 1996 purchase agreement slowed
FRGC’s progress, they were not a bar to prevent FRGC from signing
an agreement to acquire the property in early January 1998. An
otherwise abandoned expenditure, if part of an integrated plan
that is implemented, is not an abandonment loss under section
165(a). Nicolazzi v. Commissioner, 79 T.C. 109, 132 (1982),
affd. 722 F.2d 324 (6th Cir. 1983). Indeed, petitioner withdrew
the zoning request prior to a vote at the November 1997 board
meeting, which indicates that he did not want to foreclose the
opportunity to resubmit the request at a later meeting.
Although petitioner would have us ignore the realities of
what transpired 2 weeks later, we decline to do so. Instead, we
view the 1995 and 1996 purchase agreements that were entered into
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