Roderick E. Carlson and Jeanette S. Carlson - Page 30




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          petitioners to include that income in their gross income for the            
          year at issue and pay a tax thereon is a result that is consis-             
          tent with the intention of Congress in enacting section                     
          108(a)(1)(B) and related provisions into the Code.                          
               We hold that the word “assets” as used in the definition of            
          the term “insolvent” in section 108(d)(3) includes assets exempt            
          from the claims of creditors under applicable State law.15  The             

               14(...continued)                                                       
          diate tax on the DOI income at issue, petitioners’ fishing permit           
          is subject to lien and levy by respondent to pay that tax.  See             
          secs. 6321, 6331.  In this regard, apparently there has been some           
          dispute between the State of Alaska and the Internal Revenue                
          Service as to whether permits like petitioners’ fishing permit              
          constitute property or a right to property for purposes of secs.            
          6321 and 6331.  See Internal Revenue Service Restructuring and              
          Reform Act of 1998, Pub. L. 105-206, sec. 3445(c)(2), 112 Stat.             
          763; 144 Cong. Rec. S4518 (daily ed. May 7, 1998) (statement of             
          Sen. Stevens) (“The State of Alaska has never conceded that these           
          permits are property that may be seized by IRS.  Yet, the IRS               
          seizes them”.).  However, in the instant case, the parties                  
          stipulated that petitioners’ fishing permit is an asset (i.e.,              
          property).                                                                  
               In addition, it is noteworthy that, effective Aug. 1, 2000,            
          petitioners may obtain a loan in an amount which does not exceed            
          $30,000, see Alaska Stat. sec. 16.10.310 (Lexis 2000), and which            
          is secured by petitioners’ fishing permit in order “to satisfy              
          past due federal tax obligations that may result in the execution           
          on and involuntary transfer of [that permit]”.  Alaska Stat. sec.           
          16.10.310(a)(1)(A)(iii) (Lexis 2000).                                       
               15Assuming arguendo that we had found that the word “assets”           
          as used in sec. 108(d)(3) does not include assets exempt from the           
          claims of creditors under applicable State law, we nonetheless              
          find on the record before us that petitioners have failed to                
          establish that petitioners’ fishing permit qualifies in all                 
          instances as such an asset.  On brief, petitioners rely on Alaska           
          Stat. sec. 09.38.015(a)(8) (Lexis 2000), and on Alaska Stat. sec.           
          16.43.150(g) (Lexis 2000), to show that petitioners’ fishing                
                                                             (continued...)           





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