-10-
Commissioner, 94 T.C. 863, 865 (1990), affd. 954 F.2d 653 (11th
Cir. 1992); U.S. Padding Corp. v. Commissioner, 88 T.C. 177, 184
(1987), affd. 865 F.2d 750 (6th Cir. 1989). Where the statute is
ambiguous, it is well established that we may look to its
legislative history and to the reason for its enactment. See
United States v. American Trucking Associations, supra at 543-
544; Centel Communications Co. v. Commissioner, 92 T.C. 612, 628
(1989), affd. 920 F.2d 1335 (7th Cir. 1990); U.S. Padding Corp.
v. Commissioner, supra at 184.
In the context of the parties' dispute, we believe that the
term “liabilities” in section 108(d)(3) is ambiguous, in
particular as to the nature of the examination to be afforded to
obligations claimed to be liabilities for purposes of the
statutory insolvency calculation.1 Therefore, this Court shall
examine the legislative purpose of the insolvency exclusion and
its related provisions.
2. Legislative History
The insolvency exclusion was added to the Code by the
Bankruptcy Tax Act of 1980 (the Bankruptcy Tax Act), Pub. L. 96-
589, sec. 2(a), 94 Stat. 3389-3392. In the Bankruptcy Tax Act,
which was enacted 2 years after Congress revised and modernized
1 Previous cases provide only limited guidance in resolving
the question presented in this case. See, e.g., Correra v.
Commissioner, T.C. Memo. 1997-356; Ng v. Commissioner, T.C. Memo.
1997-248; Caton v. Commissioner, T.C. Memo. 1995-80; Traci v.
Commissioner, T.C. Memo. 1992-708; Bressi v. Commissioner, T.C.
Memo. 1991-651, affd. without published opinion 989 F.2d 486 (3d
Cir. 1993).
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