-20-
Congress has not specified the minimum level of certainty,
but Congress’ indicated purpose of not burdening an insolvent
debtor outside of bankruptcy with an immediate tax liability, see
supra sec. II.B.2., together with the operation of the insolvency
exclusion and its limitation under section 108(a)(3), in
accordance with the statutory insolvency calculation, suggest
that Congress intended to make a debtor’s ability to pay an
immediate tax on income from discharge of indebtedness the
controlling factor in determining whether a tax burden is
imposed.9 Indeed, if a debtor has the ability to pay an
immediate tax, in the sense that assets of the debtor exceed
liabilities that he will be called upon to pay (and not in the
sense that the debtor simply has assets on hand), the concern of
imposing an unfair or unwarranted immediate tax burden vanishes.
Ability to pay an immediate tax (i.e., the statutory notion
of insolvency) is a question of fact and, although Congress has
specifically instructed us that (in determining ability to pay)
assets are to be valued at fair market value, see sec. 108(d)(3),
Congress has not otherwise instructed us on how to make that
finding or what measure of persuasion carries the burden of
proof. A taxpayer with the burden of proof must, thus, persuade
us of whether and in what amount he (as debtor) will be called
9 The Commissioner apparently agrees. See Rev. Rul. 92-53,
1992-2 C.B. 48, 49 (when a taxpayer’s liabilities exceed the fair
market value of his assets, “the taxpayer is unable to pay either
the indebtedness or the tax”).
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