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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.
On October 10, 2000, decedent died. His estate was
administered by Patrick Martinez and was closed on June 19, 2001.
When the petition was filed, Patrick Martinez resided in
Timonium, Maryland.
The Partnership’s Debts
At all relevant times, decedent 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, decedent and other general partners of the partnership
executed a personal guaranty agreement, whereby they jointly and
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
Gracia and Nancy Gracia, docket No. 6642-02.
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