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the taxpayer's conveyance of property subject to nonrecourse debt
to the mortgagee by quitclaim deed in lieu of foreclosure was a
sale or exchange), affg. T.C. Memo. 1980-355; Middleton v.
Commissioner, 77 T.C. 310, 321 (1981) (holding the taxpayer's
abandonment of real property subject to nonrecourse debt was a
sale or exchange), affd. 693 F.2d 124 (11th Cir. 1982); Freeland
v. Commissioner, 74 T.C. 970 (1980) (holding the taxpayer's
conveyance of property encumbered by nonrecourse debt to the
mortgagee was a sale or exchange); Estate of Delman v.
Commissioner, 73 T.C. 15, 28 (1979) (holding repossession of
property subject to a nonrecourse obligation is to be treated as
a sale or exchange).
The transaction before us is the functional equivalent of a
foreclosure, reconveyance in lieu of foreclosure, abandonment, or
repossession. The same consequences flow from the November 3,
1989, agreement as in the cases cited supra p. 9: the mortgagor
in each case is relieved of debt encumbering property and also is
relieved of the obligation to pay taxes and assessments against
the property. Yarbro v. Commissioner, supra at 483; Laport v.
Commissioner, supra at 1032-1033; Freeland v. Commissioner,
supra.
Any differences between the above transactions and the
transaction in the instant case are not in substance, but in
form. For example, the fact that NCNB did not directly take
title to the property is immaterial. See Sands v. Commissioner,
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