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realizes income from discharge of indebtedness. Sec. 61(a)(12);
Warbus v. Commissioner, 110 T.C. 279, 284 (1998) (citing
Vukasovich, Inc. v. Commissioner, 790 F.2d 1409, 1413-1414 (9th
Cir. 1986), affg. in part and revg. in part T.C. Memo. 1984-611).
The difference between the face value of the debt and the amount
paid in satisfaction of the debt is includable in the taxpayer’s
gross income. Babin v. Commissioner, 23 F.3d 1032, 1034 (6th
Cir. 1994), affg. T.C. Memo. 1992-673.
Accompanying the discharge of indebtedness income rule are
certain exclusions from gross income. Sec. 108(a)(1).
Petitioner has not raised any of the exclusions, and thus the
Court does not consider them.
B. Form 1099
Petitioner claims he did not receive a Form 1099-C from
Citibank discharging the debt. “The moment it becomes clear that
a debt will never have to be paid, such debt must be viewed as
having been discharged.” Cozzi v. Commissioner, 88 T.C. 435, 445
(1987). The nonreceipt of a Form 1099 does not convert a taxable
item to a nontaxable item. Vaughan v. Commissioner, T.C. Memo.
1992-317, affd. without published opinion 15 F.3d 1095 (9th Cir.
1993).
Conclusion
The Court has considered all arguments made by petitioner
and, to the extent they are not addressed herein, concludes they
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