- 2 - Respondent determined a deficiency in petitioners’ Federal income tax of $865 for the taxable year 2001. The issue for decision is whether petitioners received discharge of indebtedness income of $6,583 in taxable year 2001, which they failed to report. We hold that they did. Background Some of the facts have been stipulated and are so found. The stipulation of facts and the attached exhibits are incorporated herein by this reference. Petitioners resided in Eagar, Arizona, on the date the petition was filed in this case. From March 2000 through November 2001, petitioners had three joint credit cards issued to them by MBNA America Bank N.A. (MBNA). A statement of accounts with a closing date of July 12, 2001, showed the balance due MBNA on these accounts consisting of credit card charges, balance transfers, checks, interest, operation charges, and penalties totaled $20,645.39. Petitioners secured a loan from a bank, not identified in the record, to pay off their credit card debt, in an attempt to consolidate their liabilities. Petitioners, on August 21, 2001, made a payment of $14,937.26 to MBNA for settlement of their accounts. MBNA received said payment of $14,937.26 on August 21, 2001. As a result of this settlement transaction, MBNA issued a Form 1099-C, Cancellation of Debt, to petitioners for taxable year 2001. Also, MBNA filed with respondent a Form 1099-C with respect toPage: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011