- 13 -
liability was not at issue.6 Bradford v. Commissioner, 233 F.2d
at 939. Furthermore, in a later case, the Court of Appeals for
the Sixth Circuit questioned whether discharge of indebtedness
income might have been realized in an earlier year. Tenn. Sec.,
Inc. v. Commissioner, 674 F.2d 570, 574 (6th Cir. 1982) (“Viewing
the Bradfords as an economic unit might perhaps raise questions
of income to them collectively upon the bank’s discounting the
note.”), affg. T.C. Memo. 1978-434. We also note that
petitioner, unlike the taxpayer in Bradford, applied the loan
proceeds to obligations of his own. Accordingly, we believe that
Bradford is inapposite.
For the foregoing reasons, we conclude that petitioner may
have realized discharge of indebtedness income from the
forgiveness of the related items. Accordingly, petitioner’s
first argument fails.
II. Whether payment of the related items would be deductible as
ordinary and necessary business expenses
Petitioner’s second argument is that the payment of the
related items would have given rise to a deduction as ordinary
6 After the Court of Appeals for the Sixth Circuit issued
its opinion, the Commissioner determined a deficiency against the
taxpayer’s husband arising from the same transaction. See
Bradford v. Commissioner, 34 T.C. 1051 (1960). The notice of
deficiency was untimely due to the expiration of the applicable
limitations period for assessment, however, and we entered a
decision for the taxpayer’s husband on that ground. Id. at 1059.
Thus, neither the Court of Appeals nor this Court addressed
whether the taxpayer’s husband had realized discharge of
indebtedness income.
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: November 10, 2007