Community Bank v. Commissioner of Internal Revenue

SCHROEDER, Circuit Judge:

The appellant taxpayer is a commercial bank which held mortgages on certain real estate. It asks us to hold that the Tax Court erred in allowing the Commissioner to prove values for the properties greater than the bid prices paid by the taxpayer at nonjudicial foreclosure sales conducted in accordance with California law. The appeal concerns Treasury Regulation 1.166-6, which creates a presumption that the bid price is equal to the fair market value “in the absence of clear and convincing proof to the contrary.” 26 C.F.R. § 1.166 — 6(b)(2) (1986).

This regulation, or a…