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After concessions, the sole issue for decision is whether
petitioner must recognize discharge of indebtedness income
pursuant to section 61(a)(12). Petitioner bears the burden of
disproving respondent's determination on this issue. See Rule
142(a).
Some of the facts have been stipulated and are so found.
The stipulation of facts and the accompanying exhibits are
incorporated herein by this reference. Petitioner resided in
Shepherdstown, West Virginia, when he filed his petition. During
the year in issue, petitioner timely filed a separate Federal
income tax return.
The facts are undisputed. In 1990, petitioner and his
former wife, Norene, borrowed $130,612 from PNC Mortgage Corpora-
tion of America (PNC) to finance their purchase of a home in
Somerset, New Jersey. The Department of Veterans' Affairs
guaranteed the loan. In 1994, PNC foreclosed on the property
after petitioner and Norene (hereinafter sometimes referred to as
the borrowers) had defaulted on their payment obligations. The
property was sold for $93,251 by the county sheriff in July 1994.
At the time of the foreclosure, the borrowers owed PNC $160,014,
consisting of $129,292 mortgage principal, $23,489 accrued and
1(...continued)
of Practice and Procedure, and all dollar amounts have been
rounded to the nearest dollar.
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