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gross income by reason of the discharge of the indebtedness of
the taxpayer, provided that the taxpayer was insolvent at the
time the indebtedness was discharged.
Petitioner testified extensively about his debts and offered
into evidence a collection statement listing his assets and
liabilities. The Court, however, concludes that petitioner’s
testimony lacks credibility. Petitioner produced no
documentation to support his claims reflected on the collection
statement offered at trial.
Petitioner claimed, both in his collection statement and at
trial, that he was jointly and severally liable for the mortgage
on his business and two residences; however, petitioner owned
these properties jointly with other parties. Although petitioner
may have been jointly and severally liable with other parties for
the indebtedness on these properties, that fact, standing alone
as relates to the issue in this case, does not establish that
petitioner was insolvent without proof that the other codebtors
were themselves insolvent. The Court, therefore, rejects
petitioner’s argument. His financial statement, without
additional corroboration as regards the solvency of his
codebtors, does not satisfy or establish to the Court that he is
insolvent.
Petitioner reported $40,431 in gross income for the year at
issue. Furthermore, petitioner testified that his firm earned
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Last modified: May 25, 2011