- 12 - FDIC’s issuance and filing of the Form 1099-C with respect to the loan, while not dispositive, is certainly an identifiable event that is evidence of an intention to cancel the loan, as is the FDIC’s reclassification of the loan as a “dormant account” pursuant to established internal procedures.8 The only evidence that is perhaps inconsistent with an intention on the part of the FDIC to cancel the loan in 1994 is the November 7, 1994, letter from Mr. Eckstine to petitioner. Given the prevailing “identifiable event” standard and the state of the evidence, we conclude that respondent’s position with respect to the discharge of indebtedness issue had a reasonable basis in both law and fact and therefore was substantially justified within the meaning of section 7430(c)(4)(B)(i). Petitioners cite Portillo v. Commissioner, 988 F.2d 27 (5th Cir. 1993), revg. T.C. Memo. 1992-99, in support of their argument that respondent’s position with respect to the discharge of indebtedness issue was not substantially justified. In Portillo, the Court of Appeals for the Fifth Circuit reversed a Memorandum Opinion of this Court that denied the taxpayers’ motion for litigation costs. In so doing, the Court of Appeals 8 While the term “dormant” does not necessarily signify an intent on the part of the FDIC to cancel the loan, the language of the FDIC’s “Dormant Account Status Approval Form” for the loan in some respects evidences such an intent (e.g., “This memorandum is a request for Authorization to write off the remaining balance”).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011