Merkel v. Commissioner
United States Tax Court
Ps realized income on account of the discharge of indebtedness. Ps excluded that income pursuant to the insolvency exclusion of sec. 108(a)(1)(B), I.R.C., by including certain "contingent" liabilities in the insolvency calculation of sec. 108(d)(3), I.R.C. HELD: The term "liabilities" in sec. 108(d)(3), I.R.C., requires Ps to prove with respect to any obligation claimed to be a liability that Ps will be called upon to pay that obligation in the amount claimed.
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Ps realized income on account of the discharge of indebtedness. Ps excluded that income pursuant to the insolvency exclusion of sec. 108(a)(1)(B), I.R.C., by including certain "contingent" liabilities in the insolvency calculation of sec. 108(d)(3), I.R.C. HELD: The term "liabilities" in sec. 108(d)(3), I.R.C., requires Ps to prove with respect to any obligation claimed to be a liability that Ps will be called upon to pay that obligation in the amount claimed. HELD, FURTHER, Ps failed to prove that they would be called upon to pay any amount with respect to either of the obligations claimed…
1Opinion of the Court
Halpern, Judge:
In these consolidated cases, respondent determined deficiencies in the Federal income tax of petitioners Dudley and La Donna Merkel and David and Nancy Hepburn for their 1991 taxable (calendar) years in the amounts of $115,420 and $116,347, respectively. Both cases involve similar circumstances and require us to determine whether petitioners in the two cases (the Merkels and the Hepburns, respectively) may exclude under section 108(a)(1)(B) certain income from the discharge of indebtedness. Unless otherwise noted, all section references are to the Internal Revenue Code in…
2Cases cited23 opinions
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- Charles E. Covey, as Trustee of v. Jobst & Sons, Inc., Cross-Appellant v. Commercial National Bank of Peoria, Cross-AppelleesCourt of Appeals for the Seventh Circuit · 1992
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