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application of $11,270.42 from the Merrill Lynch account to
petitioner’s 1987 tax liability.
Respondent argues that since petitioner’s tax liabilities
were uncollectible due to her personal discharge in bankruptcy on
July 9, 1997, no portion of petitioner’s tax liabilities remained
unpaid as of July 22, 1998. Petitioner argues that her personal
discharge in bankruptcy did not extinguish her tax liabilities.
The parties stipulated that a portion of petitioner’s 1986
income tax liability was outstanding as of July 22, 1998. As a
result of our holding that the assessed lien filing fee was part
of petitioner’s 1987 tax liability, a portion of petitioner’s
1987 income tax liability was outstanding as of July 22, 1998. A
discharge of personal liability in bankruptcy “extinguishes only
one mode of enforcing a claim -- namely, an action against the
debtor in personam -- while leaving intact another -- namely, an
action against the debtor in rem.” Johnson v. Home State Bank,
501 U.S. 78, 84 (1991). Consequently, petitioner’s bankruptcy
discharge did not change the fact that a portion of petitioner’s
tax liabilities for 1986 and 1987 remained unpaid.
Assuming, for the sake of argument, that respondent is
correct that tax liabilities are considered paid when, if ever,
they become uncollectible, we address respondent’s contention
that petitioner’s 1986 and 1987 tax liabilities were rendered
uncollectible as a result of her personal discharge in
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