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6320 and/or 6330 (the notice). Petitioners seek review of the
determination to proceed with collection of their tax liabilities
for 1994, 1995, 1996, 1997, and 1999. The issue for decision is
whether respondent may proceed with collection action as
determined in the notice.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits thereto are
incorporated herein by this reference. Petitioners resided in
Des Moines, Iowa, on the date the petition was filed in this
case. Petitioners appeared before the Court; however, only David
Ray Harris (petitioner) testified.
Background
Between 1987 and 1990, petitioners started experiencing
financial difficulties. During this time, petitioners put their
house in La Porte City, Iowa, up for sale. However, after the
house did not sell as petitioners had expected, their mortgage on
the house was foreclosed. Petitioners explained their situation
to the Veterans’ Administration, which had guaranteed the
mortgage on the house. The Veterans’ Administration forgave
petitioners’ indebtedness on the mortgage in the amount of
$27,500. The Veterans’ Administration also informed petitioners
that such forgiveness of debt can be considered income under the
Internal Revenue Code. Therefore, petitioners reported that
income on their 1990 Federal income tax return.
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