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under section 6662(a)? We hold that they are to the extent
stated herein.
Background
This case was submitted fully stipulated. The facts that
have been stipulated are so found.
Petitioners’ mailing address was in Chignik, Alaska, at the
time the petition was filed.
In 1988, petitioner Roderick E. Carlson, whose occupation
during the year at issue was commercial fisherman, and petitioner
Jeanette S. Carlson purchased the fishing vessel Yantari
(Yantari), a 44-foot seiner made of fiber glass that was built in
1982. They paid $202,451 for that fishing vessel, which included
the engine. Petitioners financed their purchase of the Yantari
by borrowing money (loan) from Seattle First National Bank (bank
or Seattle First). As security for that loan, petitioners
granted to the bank a so-called preferred marine mortgage inter-
est (mortgage) in the Yantari.
During 1992, petitioners became delinquent in making pay-
ments to the bank on the loan. On February 8, 1993, when the
unpaid principal balance of the loan was $137,142, the bank
foreclosed on the Yantari, the Yantari was sold for $95,000 as
part of that foreclosure, the proceeds from that sale were used
to reduce the outstanding principal balance of the loan by
$95,000, and the bank discharged the remaining $42,142 of the
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