                  T.C. Summary Opinion 2009-92



                       UNITED STATES TAX COURT



                   JOSEPH HAKIM, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 15227-07S.              Filed June 8, 2009.



     Joseph Hakim, pro se.

     Catherine S. Tyson, for respondent.



     CHIECHI, Judge:    This case was heard pursuant to the provi-

sions of section 7463 of the Internal Revenue Code in effect when

the petition was filed.1   Pursuant to section 7463(b), the deci-

sion to be entered is not reviewable by any other court, and this

opinion shall not be treated as precedent for any other case.


     1
      Hereinafter, all section references are to the Internal
Revenue Code in effect for the year at issue. All Rule refer-
ences are to the Tax Court Rules of Practice and Procedure.
                               - 2 -

     Respondent determined a deficiency of $1,254 in petitioner’s

Federal income tax (tax) for his taxable year 2005.

     We must decide whether petitioner is entitled for his

taxable year 2005 to exclude from gross income discharge of

indebtedness of $7,239.2   We hold that he is not.

                            Background

     Some of the facts have been stipulated and are so found.

     Petitioner resided in Iowa at the time he filed the petition

in this case.

     During the period February 2002 to September 2004, peti-

tioner used his Advanta Bank credit card to purchase certain

items for, inter alia, his business known as Mr. Computers USA.

     For at least part of 2005 petitioner maintained with John

Deere Community Credit Union (John Deere Credit Union) separate

accounts in the respective names of (1) A+ Entertainment Agency,

(2) Power Jam Productions (Power Jam), (3) Mr. Computers USA, and

(4) Joseph B. Hakim.   As of July 31, 2005, the balance in those

four accounts totaled $2,737.41.

     In 2005, petitioner and Advanta Bank reached an agreement

with respect to petitioner’s Advanta Bank credit card debt under

which that bank reduced that debt by $7,239.   (We shall refer to



     2
      There is another question relating to a determination in
the notice of deficiency that respondent issued to petitioner for
his taxable year 2005, the resolution of which flows automati-
cally from our resolution of the issue that we address herein.
                               - 3 -

the amount by which Advanta Bank reduced petitioner’s Advanta

Bank credit card debt as petitioner’s debt.)

     Advanta Bank issued to petitioner Form 1099-C, Cancellation

of Debt (Advanta Bank’s Form 1099-C), with respect to his taxable

year 2005.   In that form, Advanta Bank showed that petitioner had

$7,239 of debt canceled.

     Petitioner filed Form 1040, U.S. Individual Income Tax

Return, for his taxable year 2005 (2005 return), in which he

claimed a refund of $2,723.   In petitioner’s 2005 return, peti-

tioner reported only “Business income” of $14,689.   He did not

include in gross income in that return the $7,239 of canceled

debt that Advanta Bank showed in Advanta Bank’s Form 1099-C that

it issued to petitioner for his taxable year 2005.

     Petitioner included as part of his 2005 return a separate

Schedule C, Profit or Loss From Business (Schedule C), for what

he identified therein as (1) Mr. Computers USA (2005 Mr. Comput-

ers USA Schedule C), (2) Power Jam, and (3) A Entertainment.    In

the 2005 Mr. Computers USA Schedule C, petitioner claimed for

2005 beginning inventory of $17,537, purchases of $9,561, closing

inventory of $18,572, cost of goods sold of $8,526, and gross

income of $27,990.

     In petitioner’s 2005 return, petitioner claimed with respect

to one or more of his Schedule C businesses use of (1) three

vehicles identified as a 1994 Plymouth Voyager, a 1994 Dodge
                                - 4 -

Caravan, and a 1992 Plymouth Voyager and other unidentifed

vehicles and (2) a house.

     On November 29, 2007, petitioner submitted to respondent

Form 1040X, Amended U.S. Individual Income Tax Return, for his

taxable year 2005 (2005 amended return).   Petitioner included as

part of his 2005 amended return an amended Schedule C for Mr.

Computers USA.    In that amended schedule, petitioner claimed for

2005 beginning inventory of $17,537, purchases of $2,322, closing

inventory of $11,333, cost of goods sold of $8,526, and gross

income of $27,990.   In his 2005 amended return, petitioner also

showed an adjustment of $206 to adjusted gross income that was

attributable to an increased deduction that he claimed for self-

employment tax.   By claiming in his 2005 amended return that

increased self-employment tax deduction, petitioner was able to

request a refund in the same amount (i.e., $2,723) as the amount

of refund that he requested in his 2005 return.

     On December 3, 2007, petitioner submitted to respondent Form

982, Reduction of Tax Attributes Due to Discharge of Indebtedness

(and Section 1082 Basis Adjustment) (petitioner’s Form 982).      In

that form, petitioner entered $7,239 on line 10.3   That amount


     3
      Line 10 of petitioner’s Form 982 required him to include on
that line the amount of discharge of indebtedness excluded from
gross income “Applied to reduce the basis of nondepreciable and
depreciable property if not reduced on line 5. DO NOT use in the
case of discharge of qualified farm indebtedness”. Line 5 of
petitioner’s Form 982, which line 10 of that form referenced,
                                                   (continued...)
                                - 5 -

was equal to the amount of petitioner’s debt that Advanta Bank

canceled in 2005.    Although required to do so by Form 982,

petitioner did not indicate in petitioner’s Form 982 (1) why

Advanta Bank’s cancellation of petitioner’s debt is excludable

from his gross income for his taxable year 2005 or (2) the total

amount of that canceled debt that he excluded from his gross

income for that year.

     Petitioner filed a tax return for his taxable year 2006.

Petitioner included as part of that return Schedule C for Mr.

Computers USA.    In that schedule, petitioner claimed for 2006,

inter alia, beginning inventory of $18,572, which was the amount

that he claimed as closing inventory in the 2005 Mr. Computers

USA Schedule C.    As of the date of the trial in this case,

petitioner had not filed an amended tax return for his taxable

year 2006.

     Respondent issued a notice of deficiency to petitioner for

his taxable year 2005.    In that notice, respondent determined

that petitioner has cancellation of debt income of $7,239.




     3
      (...continued)
required petitioner to include on that line 5 the amount of
discharge of indebtedness excluded from gross income “That you
elect under section 108(b)(5) to apply first to reduce the basis
(under section 1017) of depreciable property”. Petitioner made
no entry on line 5 of petitioner’s Form 982.
                                 - 6 -

                              Discussion

     Petitioner bears the burden of proving error in the determi-

nation that he has cancellation of debt income of $7,239.4       See

Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).

     Section 61(a) defines the term “gross income” broadly to

mean all income from whatever source derived, including income

from discharge of indebtedness (DOI).      See sec. 61(a)(12).

Section 108(a) provides certain exceptions to section 61(a)(12).

As pertinent here, section 108(a)(1)(B) excludes from gross

income any amount that otherwise would be includible in gross

income by reason of the discharge in whole or in part of indebt-

edness of the taxpayer if the discharge occurs when the taxpayer

is insolvent.     The amount of DOI income excluded under section

108(a)(1)(B) is not to exceed the amount by which the taxpayer is

insolvent.     See sec. 108(a)(3).    The term “insolvent” is defined

in section 108(d)(3) as follows:

          SEC. 108(d). Meaning of Terms; Special Rules
     Relating to Certain Provisions.--

         *        *       *       *        *       *       *

                  (3) Insolvent.--For purposes of this section
             [108], the term “insolvent” means the excess of
             liabilities over the fair market value of assets.
             With respect to any discharge, whether or not the
             taxpayer is insolvent, and the amount by which the
             taxpayer is insolvent, shall be determined on the



     4
      Petitioner does not claim that the burden of proof shifts
to respondent under sec. 7491(a).
                                   - 7 -

            basis of the taxpayer’s assets and liabili-
            ties immediately before the discharge.

       In support of his position that he does not have $7,239 of

DOI income for his taxable year 2005, petitioner argues that,

because petitioner’s debt that Advanta Bank discharged was

principally attributable to his purchases of certain inventory

that he had not sold as of the time that bank canceled that debt

and because that inventory is not includible in his income until

sold, Advanta Bank’s discharge of petitioner’s debt should not be

includible in his income.    Petitioner’s argument has no basis in

law.    We reject that argument.

       In further support of his position that he does not have

$7,239 of DOI income for his taxable year 2005, petitioner argues

that he was insolvent at the time of Advanta Bank’s discharge of

petitioner’s debt.    In support of that argument, petitioner

relies on his testimony and certain documentary evidence.

       We turn first to petitioner’s testimony.   We found his

testimony to be self-serving, conclusory, and uncorroborated in

material respects.    We are not required to, and we shall not,

rely on that testimony to establish that petitioner was insolvent

at the time of Advanta Bank’s discharge of petitioner’s debt.

       We turn now to the documentary evidence on which petitioner

relies.    That evidence consists of (1) a list that he prepared

shortly before the trial in this case of the assets and liabili-

ties that he contends he had immediately before Advanta Bank
                               - 8 -

discharged petitioner’s debt (petitioner’s list of assets and

liabilities) and (2) certain Kelley Blue Book Web site printouts

(Kelley Blue Book printouts) for certain models of certain

vehicles.   Petitioner’s list of assets and liabilities is nothing

more than a self-serving, conclusory, and uncorroborated list of

the claimed fair market values of the assets and the claimed

amounts of the liabilities that petitioner contends he had

immediately before Advanta Bank’s discharge of petitioner’s debt.

The Kelley Blue Book printouts show that book’s values as of

February 2, 2009, the date of the trial in this case, of certain

models of certain vehicles that petitioner contends he owned

immediately before that discharge.5    We are not required to, and

we shall not, rely on petitioner’s list of assets and liabilities

and the Kelley Blue Book printouts to establish that petitioner

was insolvent at the time of Advanta Bank’s discharge of peti-

tioner’s debt.

     On the record before us, we find that petitioner has failed

to carry his burden of establishing that he was insolvent within

the meaning of section 108(d)(3) at the time of Advanta Bank’s

discharge of petitioner’s debt.

     Based upon our examination of the entire record before us,

we find that petitioner has failed to carry his burden of estab-


     5
      In fact, petitioner did not claim in his 2005 return busi-
ness use of the model vehicle to which one of the Kelley Blue
Book printouts pertained.
                                 - 9 -

lishing that he does not have $7,239 of DOI income for his

taxable year 2005.

     We have considered all of petitioner’s contentions and

arguments that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot.6

     To reflect the foregoing,


                                         Decision will be entered

                                 for respondent.




     6
      It appears that petitioner may be claiming that he is
entitled under sec. 108(b) to reduce the respective bases of
certain assets that he owned. We reject that claim. As perti-
nent here, sec. 108(b) applies only in the event that discharge
of a debt is excluded from income under sec. 108(a)(1)(B). See
sec. 108(b)(1). We have rejected petitioner’s argument under
sec. 108(a)(1)(B).
