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Respondent determined a deficiency in petitioners' Federal
income tax for 1998 of $3,859. The issue for decision is whether
petitioners had discharge of indebtedness income in 1998.1
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the accompanying exhibits are
incorporated herein by reference. At the time the petition was
filed, petitioners resided in Windsor, Maine.
Prior to 1996, Mr. Violette (petitioner) obtained an
insurance policy from Minnesota Life Insurance Company (MLIC)
which provided for payments on his loans if a disability rendered
him unable to pay. Petitioner began receiving benefits pursuant
to his MLIC policy on June 4, 1996. Between June 4, 1996, and
April 14, 1998, MLIC made payments on petitioner's loans totaling
$24,421.
Some time in 1998, MLIC determined that petitioner was not
entitled to the insurance benefits he had received. It also
determined that attempts at collection would be futile. For
1998, MLIC issued in petitioner’s name a Form 1099-MISC,
Miscellaneous Income, reporting nonemployee compensation of
1 In the notice of deficiency respondent also determined
that petitioners had unreported interest income, dividend income,
Social Security income, and an early withdrawal penalty. Because
petitioners have not questioned these determinations they are
deemed to have conceded their correctness. See Rule 34(b)(4);
Rybak v. Commissioner, 91 T.C. 524, 566 n.19 (1988); Zimmerman v.
Commissioner, 67 T.C. 94, 104 n.7 (1976).
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