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money received plus the fair market value of the property
received. Section 1.1001-2(a)(1), Income Tax Regs., further
defines "amount realized":
Except as provided in paragraph (a)(2) and (3) of this
section, the amount realized from a sale or other
disposition of property includes the amount of
liabilities from which the transferor is discharged as
a result of the sale or disposition.
Various methods exist by which indebtedness may be satisfied,
each method producing a different tax consequence. Danenberg v.
Commissioner, 73 T.C. 370, 381 (1979). Whether the realized
income is gain on the disposition of property or COI income
depends on the particular facts. Id.
In the instant case, the sale of the property, the transfer
of cash of $177,495, and the assignment of the sale proceeds to
NCNB has the same practical effect as several other transactions
which have been held to be a "sale or exchange". Helvering v.
Hammel, 311 U.S. 504 (1941) (holding that an involuntary
foreclosure sale of real estate was a sale or exchange); Allan v.
Commissioner, 856 F.2d 1169 (8th Cir. 1988) (treating the
taxpayer's reconveyance of property subject to nonrecourse debt
as a sale or exchange), affg. 86 T.C. 655 (1986); Yarbro v.
Commissioner, 737 F.2d 479, 483-485 (5th Cir. 1984) (holding that
an abandonment of real property subject to a nonrecourse debt was
an exchange; i.e., an act of giving one thing in return for
another thing regarded as equivalent), affg. T.C. Memo. 1982-675;
Laport v. Commissioner, 671 F.2d 1028 (7th Cir. 1982) (holding
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