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deed, of course it suffered a loss. Petitioner has failed to
prove that $1 was the full amount realized on the disposition of
the assets. On brief, petitioner states: “Wedgewood’s
liabilities greatly exceeded the fair market value of its
assets.” That may be so. Nevertheless, petitioner has failed to
show that the indebtedness secured by the liens was other than
nonrecourse. If it was nonrecourse, then, notwithstanding the
fair market value of the assets subject to those liens, the
amount realized on the disposition of those assets included the
amount of the liens, $1,865,000. We assume that the liquor
license and liquor inventory were sold for $126,000.12
Petitioner has failed to argue that the amount realized by
Wedgewood does not include any actual cash proceeds from the sale
of assets not subject to liens. Thus, the amount realized on the
disposition of the assets was $1,991,001, which is the sum of the
indebtedness discharged, the cash proceeds of $126,000, and the
nominal cash of $1. Since Wedgewood’s adjusted basis in the
assets was $2,506,244, Wedgewood’s loss was $515,243 ($515,243 =
$2,506,244 - 1,991,001).
12 According to Wedgewood’s Form 4797 for taxable year
1990, the liquor license sold for $125,000. We add to that
amount the $1,000 listed value of the liquor inventory from the
deed for $126,000.
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