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an addition to tax under section 6654(a) because she did not pay
sufficient estimated tax for 1994.
OPINION
Section 61(a) provides that gross income means all income
from whatever source derived. That section has been interpreted
broadly to encompass all gains except those specifically exempted
by Congress. See Commissioner v. Glenshaw Glass Co., 348 U.S.
426, 430 (1955). Gross income, however, generally does not
include the value of property acquired by gift or advancements in
the nature of loans. See sec. 102(a); Beaver v. Commissioner, 55
T.C. 85, 91 (1970); Gatlin v. Commissioner, 34 B.T.A. 50 (1936).
On the other hand, it generally does include income from the
discharge of indebtedness. See sec. 61(a)(12); United States v.
Kirby Lumber Co., 284 U.S. 1 (1931); see also, e.g., Babin v.
Commissioner, 23 F.3d 1032, 1034 (6th Cir. 1994), affg. T.C.
Memo. 1992-673; Cozzi v. Commissioner, 88 T.C. 435, 445 (1987).
The gain to the debtor from the forgiveness of debt results from
the freeing up of assets that otherwise would have been required
to pay off the debt. See United States v. Kirby Lumber Co.,
supra; Milenbach v. Commissioner, 106 T.C. 184, 202 (1996).
Whether a debt has been discharged depends on the substance of
the transaction. See Cozzi v. Commissioner, supra. When a debt
has been canceled is determined on the facts and circumstances of
each case. See id.; Miller Trust v. Commissioner, 76 T.C. 191,
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