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settlement agreement, the value of the ANG stock was less than
the debt balance.
Petitioner’s reliance upon Aizawa v. Commissioner, 99 T.C.
197 (1992), is misplaced. Aizawa held that where an unpaid
deficiency judgment on a recourse debt survived the foreclosure
sale, and there was a “clear separation” between the foreclosure
sale and the unpaid recourse liability which survived the
foreclosure sale, the amount realized under section 1001(a)
equaled the foreclosure sale price rather than the full unpaid
mortgage principal. By contrast, in the instant case, as
previously discussed, the partnership’s and the partners’
liabilities were effectively limited to the partnership’s project
assets that collateralized the indebtedness. Consequently, then,
these liabilities did not survive the foreclosure sale, since DOE
acquired all the partnership’s project assets in the foreclosure
sale. Insofar as the record reveals, DOE neither sought nor
obtained any deficiency judgment against the partnership or any
partner for the debt balance remaining after the foreclosure
sale.
In sum, we conclude and hold that the partnership must take
into account the full amount of the $1.57 billion debt as the
amount the partnership realized upon disposition of the project
assets upon the conclusion of the foreclosure litigation on
November 2, 1987. See Commissioner v. Tufts, 461 U.S. 300
(1983).
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