Charles B. Owens and Sally L. Owens - Page 12




                                       - 12 -                                         
          FDIC’s issuance and filing of the Form 1099-C with respect to the           
          loan, while not dispositive, is certainly an identifiable event             
          that is evidence of an intention to cancel the loan, as is the              
          FDIC’s reclassification of the loan as a “dormant account”                  
          pursuant to established internal procedures.8  The only evidence            
          that is perhaps inconsistent with an intention on the part of the           
          FDIC to cancel the loan in 1994 is the November 7, 1994, letter             
          from Mr. Eckstine to petitioner.  Given the prevailing                      
          “identifiable event” standard and the state of the evidence, we             
          conclude that respondent’s position with respect to the discharge           
          of indebtedness issue had a reasonable basis in both law and fact           
          and therefore was substantially justified within the meaning of             
          section 7430(c)(4)(B)(i).                                                   
               Petitioners cite Portillo v. Commissioner, 988 F.2d 27 (5th            
          Cir. 1993), revg. T.C. Memo. 1992-99, in support of their                   
          argument that respondent’s position with respect to the discharge           
          of indebtedness issue was not substantially justified.  In                  
          Portillo, the Court of Appeals for the Fifth Circuit reversed a             
          Memorandum Opinion of this Court that denied the taxpayers’                 
          motion for litigation costs.  In so doing, the Court of Appeals             



               8  While the term “dormant” does not necessarily signify an            
          intent on the part of the FDIC to cancel the loan, the language             
          of the FDIC’s “Dormant Account Status Approval Form” for the loan           
          in some respects evidences such an intent (e.g., “This memorandum           
          is a request for Authorization to write off the remaining                   
          balance”).                                                                  





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  Next

Last modified: May 25, 2011