- 21 -
as a result of the settlement.14 If a settlement alone were
sufficient to establish the disputed nature of a debt, a taxpayer
whose liability for the full amount of a settled debt was not in
question would reap a windfall in the form of an untaxed freeing
of the assets previously offset by the liability represented by
the debt. In contrast, in the case of a settlement of a truly
disputed debt, the settlement does not give rise to an accession
to income due to the freeing of the debtor's assets because the
amount of the assets that were offset by the debt is not clear.
In the instant case, there is no direct evidence other than
petitioner’s testimony that he disputed his debt to Caesar’s
prior to the institution of proceedings in the instant case.
Although petitioner contends that his testimony concerning his
dealings with the casino was uncontradicted, we need not accept
such testimony at face value where it is improbable,
unreasonable, or questionable. Quock Ting v. United States, 140
U.S. 417 (1891); Archer v. Commissioner, 227 F.2d 270, 273 (5th
Cir. 1955), affg. a Memorandum Opinion of this Court dated
February 18, 1954. We find the evidence supporting and refuting
petitioner’s claim concerning the alleged dispute with Caesar’s,
14
We conclude, based on the record, that petitioner has not
established the existence of any dispute concerning the
enforceability of his debt to Caesar’s on any of the grounds
alleged by him. The issue as to the enforceability of a debt,
which was a factor considered by the Court of Appeals for the
Third Circuit in Zarin v. Commissioner, 916 F.2d at 115-116, is
accordingly not present in the instant case.
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