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Prior to 1997, BankTEXAS made efforts to collect the loan
from petitioners by renewing the note several times, making the
repayment structure easier, collecting interest only, and
unsuccessfully attempting to collect the collateral. On April
20, 1997, BankTEXAS deemed the loan to be uncollectible and
discharged the loan in the amount of $32,000 and $14,395 in
accrued interest. Thereafter, BankTEXAS reported the debt
forgiven to the Internal Revenue Service on a Form 1099-C for
1997.
During 1997, Mrs. Acuncius was an art teacher in a public
school and Mr. Acuncius was a horse trainer. In addition, Mrs.
Acuncius pursued a Master’s degree in education, and Mr. Acuncius
pursued a Master’s degree in agricultural development in the hope
of increasing their earning potential and obtaining better jobs.
In 1997, petitioners owned the following assets:
Asset Value
Livestock Less than $5,000
1979 Jeep 500
1986 Ford truck 500
Household goods 1,000 to 1,500
Jewelry Less than 1,000
In 1997, petitioners owed the following liabilities:
Liability Amount
BankTEXAS loan $32,000
Accrued interest on loan 14,396
Teaching certification 4,000
Master’s degree student loan: Mrs. Acuncius 8,751
Master’s degree student loan: Mr. Acuncius 17,269
1991 Income taxes 700
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Last modified: May 25, 2011