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as release of the transferor's indebtedness. That does not
prevent the transfer from being a sale or exchange resulting
in capital gain or loss. So where an owner pledges its
property for a loan, the proceeds of which are greater than
its basis, and subsequently succeeds in transferring the
property for a cancellation of debt, the excess of what it
received over the basis of the property is gain, taxable in
the year in which the property is disposed of and the debt
discharged. [Citations omitted.]
The FDIC seized the quitclaim deed petitioner had executed.
In effect, petitioner received in exchange the Mortgage Discharge
forgiving the entire $3,600,000 debt. And, as we noted above,
the seizure, like any other involuntary transfer, qualifies as a
"disposition" of the property, plainly within section 1001(a).
See Helvering v. Hammel, supra. Since petitioner had a basis of
$3,152,867 in the property, and since the amount discharged was
greater by $447,133 than petitioner's basis, petitioner realized
a capital gain of $447,133.
Among other contentions, petitioner has taken the position
that the filing of his bankruptcy petition on December 12, 1991,
5 days before the FDIC's Mortgage Discharge of November 12, 1991,
was recorded prevented that discharge from being effective under
Massachusetts law. To be sure, Massachusetts law does provide
that the "recordation of a duly executed and acknowledged deed
of release or written acknowledgment of payment or satisfaction
* * * shall be conclusive evidence that the mortgage has been
discharged" notwithstanding prior assignment of the note unless
there had been prior recordation of such assignment. Mass. Ann.
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