Richard William Corduan - Page 7




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          1098, 5498, and W-2G” provided by the Internal Revenue Service              
          for 1995.  A Form 1099-A is intended to be used only as                     
          notification of the acquisition of an interest in secured                   
          property in full or partial satisfaction of debt, or of the                 
          abandonment of secured property; it is not meant to necessarily             
          imply that the debtor received DOI income.  The form designed to            
          be used in the case of DOI is Form 1099-C, Cancellation of Debt.            
          If both forms apply, only Form 1099-C need be filed.  In this               
          case, after petitioner received the Form 1099-A, he continued to            
          attempt to make payments on the debt.  Furthermore, petitioner              
          was not released from all further claims by Associates until he             
          made a final $1,000 payment the following year.  We find that,              
          contrary to respondent’s determination, the debt was not                    
          discharged until 1996.                                                      
               Finally, we find that petitioner recognized only $5,006 in             
          DOI income, rather than $6,005 as determined by respondent.  The            
          Bobcat, with a fair market value of $12,575, was obtained by                
          Associates in 1995, and petitioner paid Associates $1,000 in                
          1996.  Therefore, petitioner transferred $13,575 in cash and                
          property to Associates in exchange for the discharge of $18,581             
          of indebtedness.                                                            
               The second issue for decision is whether petitioner has                
          properly substantiated various items on his Federal income tax              
          returns for the years in issue.                                             






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