110 T.C. No. 21
UNITED STATES TAX COURT
RICHARD LEO WARBUS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2194-96. Filed April 21, 1998.
P, a member of a federally recognized tribe of
American Indians, purchased a boat that he used in
treaty "fishing-rights-related" activity as defined in
sec. 7873, I.R.C. In 1984, P obtained a commercial
loan for items related to the fishing boat from the
same lender who financed the purchase of the boat. The
loan repayment was guaranteed by the Bureau of Indian
Affairs (BIA). When P failed to make payments on the
loan as they became due, the lender repossessed and
sold the boat. In 1993, pursuant to its loan guaranty,
the BIA paid to the lender outstanding principal and
interest, which it deemed uncollectible from P. As a
result of the BIA payment and cancellation of his debt,
P enjoyed discharge of indebtedness income in 1993. P
did not report discharge of indebtedness income,
believing it to be exempt from tax as income from
Indian fishing-rights-related activity as described in
sec. 7873.
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