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The sole issue for decision is whether petitioners realized
discharge of indebtedness income under section 61(a)(12) and, if
so, the extent thereof under section 108(a).
Some of the facts were stipulated. Those facts and the
accompanying exhibits are so found and are incorporated herein by
reference. Petitioners’ legal residence at the time the petition
was filed was Detroit, Michigan.
Henry B. Martins (petitioner) was an engineer for the Ford
Motor Co., an automobile manufacturer, during the year at issue.
Petitioner was also engaged in a separate activity wherein he
arranged the purchase and sale of goods from overseas sources to
customers in the United States. The goods he dealt with were
generally electronic equipment, food service equipment, and other
equipment for which there was a demand and the availability of an
overseas source for its acquisition. Petitioner’s practice was
to purchase the equipment and, upon delivery to the customer,
collect the selling price. His purchases were all financed
through his American Express credit card. At some point,
petitioner was faced with a problem in collecting payments on
equipment he had delivered. As a result, he was unable to pay
his account with American Express and was classified as
delinquent. As of July 17, 2002, petitioner owed American
Express $24,831.38. Petitioner made several payments in the
ensuing months that reduced his indebtedness to $21,831.38. At
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