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Respondent relies on Aizawa v. Commissioner, 99 T.C. 197
(1992), affd. without published opinion 29 F.3d 630 (9th Cir.
1994), for the proposition that the amount realized constitutes
the amount of the proceeds of the foreclosure sale, i.e., the
bid-in amount of the lender. In Aizawa, the taxpayers owned
rental property which was subject to a recourse mortgage, and
upon default, the property was acquired by the mortgagee at a
foreclosure sale. We held that the amount of the proceeds of the
foreclosure sale constituted the amount realized under section
1001(a). Notwithstanding the similar facts and circumstances,
Aizawa is distinguishable from the instant case on one key
matter. In Aizawa, the amount that the lender paid for the
property at the foreclosure sale was equal to the fair market
value of the property. In Aizawa v. Commissioner, supra at 200-
201, the Court stated:
It cannot be gainsaid that the property was sold for
$72,700 (an amount which we have no reason to conclude
did not represent the fair market value of the
property) and that petitioners received, by way of a
reduction in the judgment of the foreclosure, that
amount and nothing more. That is the "amount realized"
under section 1001(a) which is subtracted from
petitioners' basis in order to determine the amount of
their loss. [Fn. ref. omitted; emphasis added.]
In the instant case, we have clear and convincing proof to
conclude that the bid-in price of the lender does not represent
the fair market value of the Dime Circle property.
We note that this was not an arm's-length transaction
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