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set forth specific facts showing that there is a genuine issue
for trial.” Petitioner’s opposition to the Motion for Summary
Judgment argues that he is entitled to a ruling as a matter of
law. We conclude that the material facts are not disputed and
that judgment may be rendered as a matter of law.
Section 61(a)(12) specifically identifies cancellation of
indebtedness as an item includable in gross income. In Cozzi v.
Commissioner, 88 T.C. 435, 445 (1987), the Court stated:
The general theory is that to the extent that a
taxpayer has been released from indebtedness, he has
realized an accession to income because the
cancellation effects a freeing of assets previously
offset by the liability arising from such indebtedness.
United States v. Kirby Lumber Co., 284 U.S. 1 (1931).
Whether a debt has been discharged is dependent on the
substance of the transactions. Mere formalisms
arranged by the parties are not binding in the
application of the tax laws. Commissioner v. Court
Holding Co., 324 U.S. 331 (1945). Consequently, the
surrender or failure to surrender a note is not
determinative of the release of liability. Seay v.
Commissioner, T.C. Memo. 1974-305.
The moment it becomes clear that a debt will never
have to be paid, such debt must be viewed as having
been discharged. The test for determining such moment
requires a practical assessment of the facts and
circumstances relating to the likelihood of payment.
* * * Any “identifiable event” which fixes the loss
with certainty may be taken into consideration. United
States v. S.S. White Dental Mfg. Co., 274 U.S. 398
(1927).
Notwithstanding the arguments he made in his correspondence with
GMAC, petitioner now argues that GMAC did not execute a formal
release in writing or otherwise indicate its intent to release
and discharge petitioner. Sending the Form 1099-C, however, is
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