Roderick E. Carlson and Jeanette S. Carlson - Page 3




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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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