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Respondent determined a deficiency of $1,760 in petitioner’s
Federal income tax for the year 2001. The sole issue for
decision is whether petitioner 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, with the
annexed exhibits, are so found and are made part hereof.
Petitioner’s legal residence at the time the petition was filed
was Everett, Washington.
Petitioner is a civil litigation attorney in the State of
Washington. From 1985 until 1995, he was a solo practitioner.
In 1995, petitioner hired a recent law graduate, Julie Herber, as
an associate and ultimately divided the practice with her.
During 2001, Ms. Herber owned one-half of the building where
petitioner’s practice is conducted and one-half of his principal
residence. Ms. Herber, along with two other people, also shared
ownership of a cabin with petitioner. Petitioner and Ms. Herber
were married sometime after 2002.
Until 2001, petitioner had a credit card account with MBNA
America Bank N.A. (MBNA). Sometime during 2001 petitioner
defaulted on his credit card payments and allowed the outstanding
balance to exceed his credit limit. As of November 2, 2001, the
unpaid balance on petitioner’s MBNA credit card was $18,240.
Petitioner did not contact MBNA to dispute the amount owing.
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