6
Newmark v. Commissioner, 311 F.2d 913, 915 (2d Cir. 1962), affg.
T.C. Memo. 1961-285.
Moreover, it is well settled that gross income includes
income from the discharge of indebtedness. Sec. 61(a)(12);
Commissioner v. Jacobson, 336 U.S. 28 (1949); Helvering v.
American Chicle Co., 291 U.S. 426 (1934); United States v. Kirby
Lumber Co., 284 U.S. 1 (1931). The evidence in this case makes
it clear that petitioner owed money to MILICO on account of the
advances he received in 1988 and 1989, and that a portion of such
debt was discharged in the taxable year at issue. Therefore, the
amount of debt discharged in favor of petitioner constitutes
income to him for 1990 as determined by respondent. Petitioner
was not taxed on the advances when received, but he is taxable on
the discharge of the obligation to repay them.
Based on the foregoing, we hold that petitioner failed to
report commission income in the amount determined by respondent.
In order to account for chargeback expenses of $1,526, and
miscellaneous expenses of $115, as conceded by respondent,
Decision will be entered
under Rule 155.
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Last modified: May 25, 2011