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As a preliminary matter, petitioners argue that UNB released
Mark from his guaranty of the $2.6 million loan and UNB forgave
the $750,000 in the 1991 agreement (which did not effectuate the
transfer of the 6,842 UBI shares). We agree.
We found as a fact that UNB released Mark from his guaranty
and forgave the $750,000 loan in 1991 in exchange for Mr.
Friedland’s transfer of 5,518 shares of UBI stock to UNB. See
supra pp. 6-7. This transfer from the prior year is not in
issue, and respondent’s argument in this regard is without merit.
Petitioners also contend that Mr. Friedland did not have an
amount realized for purposes of section 1001(b) with respect to
the transfer of the 6,842 shares of the pledged stock.
Petitioners argue that the only consideration under the 1992
agreement was the cancellation of debt owed to UNB by CHC.
Accordingly, petitioners contend that section 1.1001-2(a)(1),
Income Tax Regs., is inapplicable because the term “amount
realized”, although it includes liabilities of the transferor
that are discharged as a result of a sale or other disposition of
property, does not include forgiveness of indebtedness of a
person or entity other than the transferor. Petitioners cite
INI, Inc. v. Commissioner, T.C. Memo. 1995-112, affd. without
published opinion 107 F.3d 27 (11th Cir. 1997), in support of
this argument.
In INI, Inc., Mr. Jones and Mr. Cates were each 50-percent
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