- 11 - T.C. Memo. 1997-146 (holding that the discharge of nonrecourse debt and release of ownership in the property that secured the debt is a sale or exchange even though the mortgagee did not take title to the property). Petitioner argues that the discharge of the loans by the mortgagee falls under the purview of Gershkowitz v. Commissioner, 88 T.C. 984 (1987), and Rev. Rul. 91-31, 1991-1 C.B. 19. In Gershkowitz, several partnerships were involved in two identical transactions. Each partnership satisfied $250,000 of nonrecourse loans with a cash payment of $40,000 but retained the property securing the loans. Each partnership obtained the funds to settle the above loans by borrowing the $40,000 from another lender on a nonrecourse basis and ultimately satisfying the latter loan by transferring the encumbered property to the lender. We held that the cancellation of the $250,000 of nonrecourse loans without the surrender of the property securing those loans resulted in COI income under section 61(a)(12) to the extent that the canceled debt exceeded the cash payment. Gershkowitz v. Commissioner, supra at 1014. With respect to each nonrecourse loan of $40,000, we held that the entire outstanding balance of the loan must be included in the amount realized in the calculation of gain under section 1001. Id. at 1016. Petitioner maintains that the facts are similar to those of Gershkowitz in that NCNB agreed to discharge $25,582,181 ofPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
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