- 35 -
(ii) when the purchaser is insol-
vent, and
(C) but for this paragraph, such reduc-
tion would be treated as income to the pur-
chaser from the discharge of indebtedness,
then such reduction shall be treated as a
purchase price adjustment.
The language of section 108(e)(5) is plain and unambiguous.
By its terms, section 108(e)(5) applies only when “the debt of a
purchaser of property to the seller of such property which arose
out of the purchase of such property is reduced”. Sec.
108(e)(5)(A). We may not resort to the legislative history of
section 108(e)(5), as petitioners urge.31 See Burlington N. R.R.
Co. v. Okla. Tax Commn., 481 U.S. 454, 461 (1987); Fernandez v.
Commissioner, 114 T.C. 324, 329-330 (2000).
The $54,400 check dated June 3, 2003, that petitioners
issued to Kevin O’Malley did not reduce any debt of Kevin O’Mal-
ley to petitioners. Indeed, petitioners maintain that it was
petitioners who owed $54,400 to Kevin O’Malley as a result of the
December 2, 1999 transaction, not Kevin O’Malley who owed peti-
31Nor are there any exceptional circumstances warranting our
turning for guidance to the legislative history of sec.
108(e)(5). See Burlington N. R.R. Co. v. Okla. Tax Commn., 481
U.S. 454, 461 (1987); Fernandez v. Commissioner, 114 T.C. 324,
329-330 (2000). Nonetheless, it is noteworthy that, consistent
with its plain language, the legislative history of sec.
108(e)(5) provides that that section applies only when the debt
of a purchaser of property to the seller of such property, which
arose out of the purchase of such property, is reduced. See S.
Rept. 96-1035 at 16 (1980), 1980-2 C.B. 620, 628.
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