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represented the lender’s sole security on the loan. See id. at
439.
The debtor made no payment and engaged in no communication
with the lender with respect to the loan during 1977, 1978, 1979,
1980, and 1981. Id. at 439-440. The Commissioner contended that
the production agreement became worthless and was abandoned by
the debtor in 1980, that the debtor was released from the debt in
1980, and that the debtor realized income as a result of that
release. Id. at 446. The taxpayers conceded that an abandonment
of the production agreement would result in ordinary income but
contended that the production agreement did not lose its value
and that the debtor did not abandon the production agreement in
1980. Id. Applying a facts and circumstances analysis, we held
that the production agreement had become worthless as of 1980,
that the debtor had no intention of enforcing its rights under
the production agreement, and that the lender had no intention of
enforcing its rights against the debtor under the loan agreement.
Id. at 446-447. We further held that the failure of the debtor
to make the scheduled final payment to the lender in 1980
constituted an “identifiable event” evidencing the debtor’s
abandonment of the worthless production agreement. Id. at 447.
We concluded that the abandonment by the debtor demonstrated
that the discharge occurred in 1980 as asserted by the
Commissioner. Id. at 445-448.
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