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from the foreclosure sale in 1985.58 Respondent agrees that he
bears the burden of proof on this issue under Rule 142(a).
The transfer of property in a foreclosure sale represents a
sale or exchange for tax purposes. Helvering v. Hammel, 311 U.S.
504 (1941); 2925 Briarpark, Ltd. v. Commissioner, 163 F.3d 313,
318 (5th Cir. 1999), affg. T.C. Memo. 1997-298; Cox v.
Commissioner, 68 F.3d 128, 133 (5th Cir. 1995), affg. T.C. Memo.
1994-189; Yarbro v. Commissioner, 737 F.2d 479, 485 (5th Cir.
1984), affg. T.C. Memo. 1982-675; Aizawa v. Commissioner, 99 T.C.
197, 198 (1992), affd. without published opinion 29 F.3d 630 (9th
Cir. 1994). Under section 1001(a), the amount of gain realized
from a sale or exchange is the excess of the amount realized over
the taxpayer’s adjusted basis in the property. In the case of
recourse debt, the amount realized from the transfer of property
in a foreclosure sale is the fair market value of the property on
the date of the sale. Frazier v. Commissioner, 111 T.C. 243, 245
(1998); Marcaccio v. Commissioner, T.C. Memo. 1995-174. The
amount realized from a sale or other disposition of property
includes the amount of liabilities from which the transferor is
discharged as a result of the sale or other disposition. 2925
Briarpark, Ltd. v. Commissioner, supra at 317; sec. 1.1001-
2(a)(1), Income Tax Regs. Any unpaid portion of the recourse
58Respondent originally determined that petitioner realized
cancellation of indebtedness income. Respondent now concedes
this determination.
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