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Generally, we will not consider issues that are raised for the
first time at trial or on brief. Foil v. Commissioner, 92 T.C.
376, 418 (1989), affd. 920 F.2d 1196 (5th Cir. 1990); Markwardt
v. Commissioner, 64 T.C. 989, 997 (1975). Accordingly, we shall
not consider whether to place the burden of proof upon
respondent.7
B. General Rule
Generally, a taxpayer must recognize income from the
discharge of indebtedness. Sec. 61(a)(12); United States v.
Kirby Lumber Co., 284 U.S. 1 (1931). The documentary evidence in
addition to the Form 1099-C and the testimony of a representative
of Advanta established: (1) Ms. Yeager borrowed $75,000 from
Advanta; (2) she did not repay the $75,000 loan; (3) Advanta
foreclosed on the property securing the $75,000 loan; (4) Advanta
sold the property securing the $75,000 loan; (5) Advanta
discharged the indebtedness of Mr. Babcock and Ms. Yeager; and
(6) Advanta issued Ms. Yeager a Form 1099-C reporting the amount
of canceled debt as $21,975. On the basis of the evidence in the
record, we conclude that in 1995 Ms. Yeager had $21,975 of COD
income.
7 The resolution of whether Ms. Yeager had COD income does
not depend on which party has the burden of proof. We resolve
this issue on the basis of a preponderance of evidence in the
record.
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