Shirley Dean Emmons and Charles W. Emmons - Page 5

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               As a result of the foreclosure sales, petitioners were                 
          relieved of personal liabilities totaling $131,847, and it has              
          been stipulated that they received no other amounts from the                
          sales.  Accordingly, the amount realized by petitioners was                 
          $131,847.  The parties have stipulated that petitioners' adjusted           
          basis in the properties totals $117,422, and that both properties           
          were held for more than 1 year.  Petitioners, therefore,                    
          recognized a long-term capital gain in the amount of $14,425 from           
          the foreclosure transactions, measured as the difference between            
          the amount realized and their adjusted basis.                               
               Petitioners argue that they could not have had any capital             
          gain from the foreclosures because they lost the properties and             
          even though the foreclosure proceeds exceeded their mortgage                
          liabilities, none of the proceeds was received by them.  We note            
          first that respondent is no longer attempting to tax petitioners            
          on the proceeds that exceeded the mortgage payoffs.  But as to              
          the proceeds used to pay off the mortgages, petitioners                     
          apparently believe that they must have actual receipt of money or           
          property in order to have taxable gain for income tax purposes.             
          This contention has been rejected by the Supreme Court.  Crane v.           
          Commissioner, supra at 13; United States v. Hendler, supra at               
          566.  Rather, a taxpayer is treated as having gain when he                  
          benefits from having his debts paid off, as if the money were               
          first paid to the taxpayer and then paid over by him to his                 
          creditors.  Crane v. Commissioner, supra; United States v.                  

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