Jerry Myers Johnson - Page 2




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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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