- 14 -
held that when a taxpayer sells or disposes of property subject
to nonrecourse debt in an amount in excess of its fair market
value, it must include in the amount realized the balance of the
nonrecourse debt even if such amount exceeds the fair market
value of the transferred property. Even assuming that Dan
Associates did not take the property subject to the modified and
build-out loans, we do not agree that Tufts was intended to limit
the liabilities included in the amount realized to only those
assumed by a third-party purchaser. The holding in Tufts focused
on the amount, not the character, of the gain or loss. Moreover,
its rationale supports respondent's position in the instant case
to the extent that the concept of "amount realized" for computing
gain or loss may be equated with the concept of consideration for
"sale or exchange" purposes. Commissioner v. Tufts, supra;
Yarbro v. Commissioner, 737 F.2d at 484.
Moreover, we are not persuaded that the regulations cited by
petitioner include nonrecourse debt in the amount realized only
if the purchaser assumes such debt. Section 1.1001-2(a), Income
Tax Regs., provides that the amount realized includes
"liabilities from which the transferor is discharged as a result
of the sale or disposition." There is no mention of a
requirement that the purchaser must assume the debt for the debt
to be discharged as a result of a sale or disposition.
Petitioner's argument under section 1.1034-1(b)(4) Income Tax
Regs., is equally unpersuasive. Section 1034 requires a taxpayer
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