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business during the redemption period).
When the redemption period expires, both legal title and the
right to possession vest in the purchaser. Mich. Comp. Laws Ann.
sec. 600.3236 (West 2000); Bankers Trust Co. v. Rose, 322 Mich.
256, 259 (1948); Shelby Co. v. Dickinson, 259 Mich. 197, 198
(1932). Possession of the property by the mortgagor after the
redemption period expires is unlawful, and no notice to quit is
necessary. Shelby Co. v. Dickinson, supra.
In view of the foregoing, it is clear that upon the
expiration of the 6-month redemption period on December 27, 1996,
petitioner no longer had any ownership right or possessory
interest in the Hazelwood property. Equally clear is the fact
that any delay by First Independence to take actual possession of
the property is without legal consequence. Thus, by virtue of
Michigan law, any loss that petitioner may have sustained from
the foreclosure on the Hazelwood property was sustained in 1996,
the year in which petitioner’s equity of redemption was
extinguished. See sec. 1.165-1(d)(1), Income Tax Regs; see also
sec. 1.165-1(b), Income Tax Regs.
5. Conclusion
Because no loss was sustained in 1997, the only taxable year
before the Court, we hold that the deduction in issue is not
allowable for that year.
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