Joseph B. Campbell - Page 23

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          Graves v. Commissioner, 89 T.C. 49, 51 (1987), supplementing 88             
          T.C. 28 (1987)).                                                            
               Respondent contends that petitioner realized $31,238 in                
          gross income as a result of the FmHA’s discharge of petitioner’s            
          indebtedness during 1990.  Respondent does not dispute, for                 
          purposes of the section 108(a)(1)(C) exclusion, (1) that the FmHA           
          is a qualified person, see sec. 108(g)(1); (2) that petitioner’s            
          indebtedness was incurred directly in connection with                       
          petitioner’s operation of the trade or business of farming, see             
          sec. 108(g)(2)(A); or (3) that petitioner was solvent, see sec.             
          108(a)(2)(B).  Respondent argues, however, that petitioner fails            
          to satisfy the test in section 108(g)(2)(B).  See Lawinger v.               
          Commissioner, 103 T.C. 428 (1994).                                          
               Petitioner testified that for 1987, 1988, and 1989 he earned           
          gross income of approximately $250 per acre multiplied by 270               
          acres of farmed land, totaling approximately $65,000 per year.              
          According to petitioner, he earned “somewhere in the neighborhood           
          of around $250 an acre for corn” and “just a little less than               
          that” for soybeans.  On cross-examination, however, petitioner              
          testified that only 110 acres of that land were “under the                  
          irrigator” and the remaining acres were not producing.                      
          Petitioner testified further that he kept annual production                 
          records as required by the FmHA in order to borrow money but that           
          he could not produce these records at trial because the FmHA had            

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