- 2 - Respondent determined a $6,860 deficiency in petitioners’ Federal income tax and a $1,372 accuracy-related penalty under section 6662(a) for 2003. The primary issue for decision is whether petitioners were insolvent within the meaning of section 108(a)(1)(B) when the $39,274.90 second mortgage on their home was canceled following the sale of the home in 2003 caused by the default on the first mortgage.2 Background Some of the facts were stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by this reference. Petitioners resided in Layton, Utah, when they filed the petition in this case. Mrs. Gale is a homemaker and earns no income. Mr. Gale is employed by the Bureau of Land Management. In 2003, Mr. Gale had back surgery and was out of work for several weeks. He did not receive a pay check for some weeks. Consequently, petitioners were unable to make the payments on two loans secured by mortgages on their home, a first mortgage held by First National Mortgage (First National) and a second mortgage held by Citibank. First National notified petitioners that it 2In the notice of deficiency, respondent also made adjustments to deductions for medical and dental expenses petitioners reported on Schedule A, Itemized Deductions, that are computed on the basis of the increase in petitioners’ adjusted gross income.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011