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that foreclosure sale, petitioners were insolvent within the
meaning of section 108(d)(3). The parties’ specific dispute here
concerns the meaning of the word “assets” as used in section
108(d)(3).
It is petitioners’ position that the word “assets” as used
in section 108(d)(3) does not include assets that are exempt from
the claims of creditors under applicable State law. In support
of that argument, petitioners rely principally on Cole v. Commis-
sioner, 42 B.T.A. 1110 (1940), and Hunt v. Commissioner, T.C.
Memo. 1989-335. According to petitioners, petitioners’ fishing
permit, which had a fair market value of $393,400 immediately
preceding the foreclosure sale on February 8, 1993, is an asset
exempt from the claims of creditors under the law of the State of
Alaska.5 Petitioners maintain that, pursuant to Cole and Hunt,
5Petitioners also contend that certain other assets, i.e.,
petitioners’ principal residence, petitioners’ household goods
and wearing apparel, petitioners’ tools of the trade, and peti-
tioners’ motor vehicle (collectively, petitioners’ other assets),
are assets exempt from the claims of creditors under applicable
State law to the extent of $54,000, $3,000, $2,800, and $3,000,
respectively. According to petitioners, those assets also are
not to be included in petitioners’ assets in performing the
calculation set forth in sec. 108(d)(3) for determining whether
petitioners are insolvent (insolvency calculation). Assuming
arguendo that we were to hold that the word “assets” as used in
sec. 108(d)(3) does not include assets that are exempt from the
claims of creditors under applicable State law and that petition-
ers’ fishing permit is an asset that is exempt from the claims of
creditors under the law of the State of Alaska, petitioners would
be insolvent within the meaning of sec. 108(d)(3) without regard
to whether a total of $62,800 of petitioners’ other assets that
petitioners claim are exempt from the claims of creditors under
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