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thereof. The issue for decision is whether the resulting
discharge of indebtedness income is excludable from gross income
pursuant to section 108.1 We hold that it is.2
Background
The parties submitted this case fully stipulated pursuant to
Rule 122. The stipulations of the parties, with accompanying
exhibits, are incorporated herein by this reference.
When petitioners filed their petition, they resided in
Bel Air, Maryland.
The Partnership’s Debts
At all relevant times, petitioner was a general partner in
Notchcliff Associates (the partnership), a Maryland general
partnership that was engaged in the business of developing a
continuing care facility.
On April 9, 1985, the partnership borrowed $18 million from
The Commercial Bank (the bank) for use in its business. On that
same date, petitioner and other general partners of the
partnership executed a personal guaranty agreement, whereby they
jointly and severally guaranteed this loan. On May 29, 1987, the
1 Unless otherwise indicated, section references are to the
Internal Revenue Code for the taxable year at issue, and Rule
references are to the Tax Court Rules of Practice and Procedure.
2 Essentially identical issues are presented in three other
cases also decided today: Ralph J. and Joan B. Mirarchi, docket
No. 6638-02; Chester L. Price, docket No. 6639-02; and Jose
Martinez, Deceased, docket No. 6641-02.
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