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the close of taxable years 1992, 1993, and 1994. We hold that
petitioners were "at risk" for this purpose.
3(a). Whether petitioners had discharge of indebtedness
income under section 61(a)(12) of $900,000 in 1994, upon the
satisfaction by guarantors of the aforementioned indebtedness to
that extent. We hold that they did.
3(b). Whether the $900,000 of discharge of indebtedness
income is excludable under the insolvency exception of section
108(a)(1)(B). We hold that it is.
3(c). Whether certain tax attributes of petitioners,
including a net operating loss, net operating loss carryover, net
capital loss, and capital loss carryover for 1994 must be reduced
under section 108(b)(1) and (2). We hold that they must.
FINDINGS OF FACT
The parties have stipulated some of the facts, which are
incorporated herein by this reference. Petitioners, Timothy J.
and Joan M. Miller,2 resided in Indiana at the time the petition
was filed.
MMS’s Initial Years
Petitioner incorporated MMS in November 1988 and was
initially its sole shareholder. MMS was an S corporation for
2 Joan M. Miller is a petitioner in this case as a result of
filing joint returns with petitioner Timothy J. Miller for the
years in issue. As the transactions at issue involved Mr. Miller
only, we shall hereinafter use "petitioner" when referring to Mr.
Miller individually.
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