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do, you must pay us for all charges made by those persons,
including charges for which you may not have intended to be
responsible.”
As petitioner received billing statements detailing charges
to the account, he forwarded them to Ms. Feathers for payment.
Ultimately, Ms. Feathers incurred $4,574.93 in charges on the
credit card.
Petitioner was subsequently contacted by a collection agency
on behalf of Citibank. He was informed of the $4,574.93
delinquent balance and was offered the opportunity to settle the
debt. In July 1999 petitioner settled the outstanding debt for
$3,202.45, or 70 percent of the total value. Citibank reported
$1,372 as cancellation of indebtedness income to respondent on
Form 1099-C, Cancellation of Debt. Petitioners did not report
this income on their joint income tax return. Petitioner denied
receiving a Form 1099-C reporting the amount of debt discharged.
Petitioner disputes having income from the discharge of
$1,372 of the debt and, raising a variety of arguments, contends
that a discharge of indebtedness does not constitute gross
income.
Discussion
Respondent's determinations in the notice of deficiency are
presumed correct, and, generally, petitioners must prove those
determinations wrong in order to prevail. Rule 142(a)(1); Welch
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