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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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