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or bankrupt.
By the beginning of 1997, the taxable year in issue,
petitioner was (and had been for some time) in arrears in the
payment of his credit card balance with Mellon Bank. Later that
year, under circumstances not disclosed in the record, Mellon
Bank forgave petitioner the debt, some $5,513, owed on his credit
card account.
Petitioner was not insolvent in 1997, nor did he file for
bankruptcy during that year.
Mellon Bank issued to petitioner, and filed with respondent,
a Form 1099-C, Cancellation of Debt, reporting the cancellation
of indebtedness in 1997 in the amount of $5,513. Petitioner did
not report any part of this amount on his Federal income tax
return for that year.
Subsequently, respondent determined that petitioner failed
to report on his tax return for 1997 income from discharge of
indebtedness in the amount of $5,513. Petitioner timely filed a
petition disputing respondent’s determination “due to the fact I
did not have an economic gain from the consideration.”
Petitioner also attached to the petition a statement alleging
that the home improvement project he helped finance was producing
rent that was not being reported by the woman he had assisted.
Petitioner concluded his statement with the following offer:
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Last modified: May 25, 2011