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Discussion
The sole issue for decision is whether petitioners must
recognize a gain on the transfer of assets to Seggerman Farms
under section 357 to the extent that the amount of liabilities
that were assumed plus the amount of liabilities to which the
property was subject exceeds the total of the adjusted basis of
the property that was transferred to the corporation.
Petitioners argue that, because they were not relieved
personally from any debt that the corporation assumed or to which
transferred property was subject or that was refinanced pursuant
to restructuring of corporate debt, they should not have to
recognize gain on the amount of the liabilities that exceeds the
adjusted basis of the transferred assets.
Section 357(c) provides, in part:
SEC. 357(c). Liabilities in Excess of Basis.--
(1) In general.--In the case of an exchange--
(A) to which section 351 applies * * *
* * * * * * *
if the sum of the amount of the liabilities assumed,
plus the amount of the liabilities to which the
property is subject, exceeds the total of the adjusted
basis of the property transferred pursuant to such
exchange, then such excess shall be considered as a
gain from the sale or exchange of a capital asset or of
property which is not a capital asset, as the case may
be.
In Rosen v. Commissioner, 62 T.C. 11 (1974), affd. without
published opinion 515 F.2d 507 (3d Cir. 1975), we addressed the
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