- 15 -
Moreover, the abandonment of collateral otherwise deemed
worthless and which represents a debt's sole payment source is an
"identifiable event" which establishes the moment when the
underlying debt is discharged. Cozzi v. Commissioner, supra at
445-447; see also Brountas v. Commissioner, 74 T.C. 1062, 1074
(1980), supplementing 73 T.C. 491 (1979), vacated and remanded on
other grounds 692 F.2d 152 (1st Cir. 1982), affd. in part and
revd. in part on other grounds sub nom. CRC Corp. v.
Commissioner, 693 F.2d 281 (3d Cir. 1982).
As a general matter, petitioners assert that respondent
narrowly interprets the word, "discharge" for purposes of section
108(a). In particular, petitioners' arguments focus on the words
"title 11 case," in section 108(a)(1)(A) and (d)(2). Petitioners
assert that the bankruptcy court's assumption of jurisdiction
over New Manchester, and the trustee's undertaking to manage New
Manchester's affairs in bankruptcy, occurred in a title 11 case
in 1992 and should, therefore, be deemed to constitute a
discharge of indebtedness for purposes of section 108(d)(2).
Conversely, respondent argues, that, during 1992, the bankruptcy
court did not effectuate a plan which discharged New Manchester's
outstanding debts, or, in fact, grant such a discharge. In that
regard, respondent points out that New Manchester possessed
assets at the end of the taxable year, 1992, and that the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011