Henry B. and Angela E. Davis Martins - Page 3

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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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