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preclude the development from going forward. Id. at 220. We
also note that we make this determination at the time the taxes
are paid or incurred, not at the time the taxpayer acquired the
property. Sec. 1.263A-2(a)(3)(ii), Income Tax Regs. Therefore,
it is not dispositive to our determination whether Calvine
120/140 had undergone physical changes as of the time those taxes
were paid, that the zoning restrictions may hinder or ultimately
prohibit development, or that petitioner initially acquired the
property for investment purposes.
On the basis of the evidence, we conclude that it was
petitioner’s intention and reasonably likely that Calvine 120/140
would be subsequently developed when the taxes were paid in 1995.
Therefore, we hold that the amounts paid for real estate taxes
for the property must be capitalized during the 1995 taxable
year.
V. Payment to Consolidated Electrical Distributors
Respondent argues that petitioner may not deduct a $7,472
payment to Consolidated Electrical Distributors in 1995 because
petitioner did not present any evidence as to the business
purpose of the payment. Although the payment was made from a
business account of petitioner’s, respondent points to instances
in which petitioner paid personal expenses from this bank
account. Petitioner counters that there could have been no other
purpose for the payment but for a business purpose. We agree
with respondent.
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