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will not be deemed to discharge the indebtedness immediately if
the cancellation is contingent upon future events. Walker v.
Commissioner, 88 F.2d 170 (5th Cir. 1937), affg. White v.
Commissioner, 34 B.T.A. 424 (1936); Jelle v. Commissioner, 116
T.C. 63, 68 (2001).
We have consistently held that "With respect to real
property, sale or transfer of ownership is complete upon the
earlier of the passage of legal title or the practical assumption
of the benefits and burdens of ownership." Keith v.
Commissioner, 115 T.C. 605, 611 (2000), and cases cited therein.
In the instant case, there is no dispute that the passage of
legal title occurred in 1994. Furthermore, the record is devoid
of any evidence that AAL assumed any benefit or burden of
ownership of the Fitch property before the passage of legal
title. For these reasons, we hold that the partnership's
cancellation of debt provided for by the covenant not to sue was
recognized on May 27, 1994. Accordingly, we shall deny
petitioners' motion for partial summary judgment and grant
respondent's cross-motion.
Petitioners argue that the statement contained in the
examination report attached to respondent's 30-day letter that
the building was surrendered in 1993 constitutes an admission
that respondent found as fact that the surrender occurred in
1993. Petitioners' reliance on the 30-day letter amounts to a
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