Frazier v. Commissioner
United States Tax Court
Ps owned investment real property subject to a recourse mortgage. Upon default, the property was acquired by the lender at a foreclosure sale. At the foreclosure sale, the lender bid in an amount for the property which was in excess of the property's fair market value. R determined that the "amount realized" by Ps at the foreclosure sale was the amount bid in by the lender, regardless of fair market value.
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Ps owned investment real property subject to a recourse mortgage. Upon default, the property was acquired by the lender at a foreclosure sale. At the foreclosure sale, the lender bid in an amount for the property which was in excess of the property's fair market value. R determined that the "amount realized" by Ps at the foreclosure sale was the amount bid in by the lender, regardless of fair market value. HELD: P's "amount realized" at the foreclosure sale is the property's fair market value. HELD, FURTHER: Bifurcated analysis used to determine income tax consequences of "amount realized"…
1Opinion of the Court
Parr, Judge:
Respondent determined deficiencies in petitioners’ Federal income tax for taxable years 1988 and 1989 in the amounts of $387 and $40,482, respectively. In the answer, respondent asserted that petitioners were liable for an addition to tax pursuant to section 6662(a).1
After concessions, the issues for decision are: (1) Whether for 1989 petitioners realized $571,179 on the foreclosure sale of certain real property or a lower amount which represents the property’s fair market value. We hold petitioners realized a lower amount which represents the property’s fair market value. (2)…
2Cases cited36 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Knetsch v. United StatesSupreme Court of the United States · 1960
- United States v. CartwrightSupreme Court of the United States · 1973
- United States v. Kirby Lumber CoSupreme Court of the United States · 1931
- Commissioner v. TuftsSupreme Court of the United States · 1983
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3Cited by19 opinions
- Rauenhorst v. Comm'rUnited States Tax Court · 2002
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- Carlson v. CommissionerUnited States Tax Court · 2001
- Coburn v. Comm'rUnited States Tax Court · 2005
- Jordan v. Comm'rUnited States Tax Court · 2009
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