-29-
Fashion Park, Inc. v. Commissioner, supra at 604. The basis of
the decision in Landreth is that a guarantor does not obtain
initially a nontaxable increase in assets for his promise.
Therefore, respondent may not use Landreth to argue that, because
relief from a guarantee does not give rise to discharge of
indebtedness income, since a guarantee is not a liability,
considering a guarantee as a liability for purposes of the
statutory insolvency calculation results in an inconsistent
application of section 108.
Respondent's argument, in any event, reveals a more
fundamental misconception regarding the insolvency exclusion and
its related provisions. Without any justification in the Code or
in the legislative history of section 108, respondent assumes
that the insolvency exclusion and section 61(a)(12), which
defines gross income as including income from discharge of
indebtedness,15 are identical in terms of legislative purpose;
i.e., that the scope of both provisions is the definition of the
term “gross income”. When respondent argues that Congress could
not have intended for taxpayers to use liabilities, the discharge
of which does not give rise to income, to exclude discharge of
15 For purposes of sec. 108, sec. 108(d)(1) defines the term
“indebtedness of the taxpayer” as “any indebtedness--(A) for
which the taxpayer is liable, or (B) subject to which the
taxpayer holds property.” There is no indication that the term
“indebtedness” in sec. 61(a)(12) with respect to a particular
taxpayer differs from the definition provided in sec. 108(d)(1).
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