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Moreover, section 61(a)(12) provides that gross income includes
income from discharge of indebtedness.
The unemployment condition of American Security’s and
Capital One’s insurance policies was satisfied, and petitioner,
as a result, realized economic benefits by the amount of the
payments the insurance companies paid towards petitioner’s credit
card liabilities during 2001. As a result of the payments made
by the insurance companies, petitioner was relieved of the
obligation of paying $10,800 and $4,448 to the issuers of his
credit cards. In Amos v. Commissioner, 47 T.C. 65, 70 (1966),
this Court stated:
Although petitioner did not receive the amount directly from
John Hancock Mutual Life Insurance Co., it is well settled
that income is not limited to direct receipt of cash, Crane
v. Commissioner, 331 U.S. 1 (1947); and that the payment of
a legal obligation of a taxpayer is income to him even
though such income is not actually received by him, Old
Colony Trust Co. v. Commissioner, 279 U.S. 716, 729 (1929);
and Schaeffer v. Commissioner, 258 F.2d 861, 864 (C.A. 6,
1958), certiorari denied 360 U.S. 917. * * *
The Court, therefore, rejects petitioner’s arguments. All of the
charges on petitioner’s credit cards represented economic
benefits petitioner received. Petitioner was relieved of his
liability to the extent of the amount paid by the insurance
companies during 2001. Respondent, therefore, is sustained.
Petitioner incorrectly contends that the insurance payments
on his credit cards are analogous to insurance recovery amounts
for damaged property (such as automobiles) where, in the latter
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