Loretta Jean Randolph - Page 13




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               Petitioner introduced no evidence showing that the                     
          corporation forgave the note before the end of 1993.  Other                 
          evidence in the record is either neutral on this issue or tends             
          to support respondent’s position that the corporation had not               
          forgiven petitioner’s debt to it before the end of 1993.  The               
          failure of the corporation or any of the spinoff corporations to            
          include the note on its tax return as an asset at yearend 1994              
          supports respondent’s position that the corporation canceled                
          petitioner’s indebtedness to it during 1994.  Petitioner has                
          submitted no evidence which shows otherwise.  Consequently, we              
          find that petitioner has failed to carry her burden of proving              
          respondent’s determination incorrect, and we sustain respondent’s           
          determination that petitioner realized income during 1994 from              
          the cancellation of indebtedness in the amount of $50,000.9                 
          Addition to Tax Under Section 6651(a)                                       
               Respondent also determined that petitioner is liable for the           
          addition to tax under section 6651(a)(1).  Respondent contends              
          that petitioner is liable for that addition to tax because she              
          did not file a timely and valid tax return.  According to                   



               9Petitioner does not claim, nor does the record establish,             
          that the discharge occurred while she was insolvent; accordingly,           
          we do not address the question of whether the so-called                     
          insolvency exception would be applicable here.  See sec.                    
          108(a)(1); Dallas Transfer & Terminal Warehouse Co. v.                      
          Commissioner, 70 F.2d 95 (5th Cir. 1934), revg. 27 B.T.A. 651               
          (1933); Gershkowitz v. Commissioner, 88 T.C. 984, 1005 (1987).              






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