                  T.C. Summary Opinion 2009-180



                     UNITED STATES TAX COURT



              THOMAS JOSEPH LINKUGEL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 28895-08S.                Filed December 1, 2009.



     Ljubomir Nacev and Mary A. Lepper, for petitioner.

     Edward Lee Walter, for respondent.



     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any



     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for the
taxable year in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
                                - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency in petitioner’s 2006

Federal income tax of $6,446, as well as a penalty under section

6662(a) of $1,289.    Respondent subsequently conceded the penalty.

     The central issue for decision is whether petitioner must

recognize cancellation of indebtedness (COI) income in 2006 and

if so, in what amount.    Because we hold that petitioner did not

have COI income in 2006, we need not and do not discuss the

subsidiary issue.

                             Background

     This case was submitted fully stipulated under Rule 122, and

the stipulated facts are so found.      The stipulation of facts and

the attached exhibits are incorporated herein by this reference.

Petitioner resided in the State of Kentucky when the petition was

filed.

     In 1983 petitioner and his then wife purchased a home in

Newport, Kentucky.    In 1999 they executed a mortgage on the

Newport property in favor of Associates Home Equity Services,

Inc. (Home Equity).

     Petitioner and his then wife fell into arrears on the

mortgage held by Home Equity.    In June 2000 Home Equity secured

an In Rem Judgment and Order of Sale in the Campbell County

Circuit Court against petitioner and his then wife of $58,796.54.
                                - 3 -

The Newport property was sold in foreclosure in August 2000.

After payment of the costs of sale and other expenses and

application of the sale proceeds, the balance of the in rem

judgment was reduced to $35,247.00.     In November 2000 petitioner

and his then wife divorced.

     In November 2000 Citigroup, the parent company of

Citimortgage, Inc. (Citimortgage), acquired Home Equity, thereby

succeeding to the mortgage given by petitioner and his then wife

to Home Equity.    www.citibank.com/citi/corporate/history/

associates.htm; See Fed. R. Evid. 201.

     In 2007 Citimortgage issued a Form 1099-C, Cancellation of

Debt, jointly to petitioner and his ex-wife which reported

$35,247.81 in income from cancellation of debt for the taxable

year 2006.    The Form 1099-C was sent to petitioner and his ex-

wife at the Newport address and was therefore not received by

petitioner.    Between the date of foreclosure in August 2000 and

the issuance of the Form 1099-C in 2007, no collection efforts

were made by either Home Equity or Citimortgage.

     Petitioner filed a timely individual income tax return for

2006, but did not include the COI income on the return.

     In a notice of deficiency respondent increased petitioner’s

income by the amount reported as COI income on the Form 1099-C.
                               - 4 -

                            Discussion

A.   Burden of Proof

      We begin by observing that the submission of a case fully

stipulated does not alter either the burden of proof or the

requirements otherwise applicable with respect to adducing proof

or the effect of failure of proof.     Rule 122(b).

      As a general rule, the Commissioner’s determinations as set

forth in a notice of deficiency are presumed correct, and the

taxpayer bears the burden of proving that those determinations

are erroneous.   Rule 142(a)(1); Welch v. Helvering, 290 U.S. 111,

115 (1933).   However, under certain circumstances the burden of

proof may shift to the Commissioner if the taxpayer introduces

credible evidence with respect to any factual issue relevant to

ascertaining the income tax liability of the taxpayer.     Sec.

7491(a)(1).

      If an information return, such as a Form 1099-C, serves as

the basis for the determination of a deficiency, section 6201(d)

may apply to shift the burden of production to the Commissioner.

See Estate of Gryder v. Commissioner, T.C. Memo. 1993-141 (citing

Portillo v. Commissioner, 932 F.2d 1128 (5th Cir. 1991), affg. in

part and revg. in part T.C. Memo. 1990-68).     Section 6201(d)

provides that in any court proceeding, if a taxpayer asserts a

reasonable dispute with respect to the income reported on an

information return and the taxpayer has fully cooperated with the
                                 - 5 -

Commissioner, then the Commissioner has the burden of producing

reasonable and probative information in addition to such

information return.   See McQuatters v. Commissioner, T.C. Memo.

1998-88.

      Petitioner contends that section 6201(d) applies.

Petitioner further contends that the COI income reported on the

Form 1099-C for 2006 was actually discharged in some earlier

year.

      Respondent has not refuted the application of section

6201(d).   Indeed, respondent has not even argued (and the record

does not demonstrate) that petitioner failed to fully cooperate

with respondent.   Therefore, we hold that section 6201(d) applies

and that the burden is shifted to respondent to produce

reasonable and probative information in addition to the Form

1099-C.

B.   Cancellation of Indebtedness Income

      In general, the term “income” as used in the Internal

Revenue Code means income from any source, including income from

the discharge of indebtedness.    Sec. 61(a)(12); Commissioner v.

Glenshaw Glass Co., 348 U.S. 426 (1955); United States v. Kirby

Lumber Co., 284 U.S. 1 (1931).    For the year in issue

Citimortgage issued to petitioner a Form 1099-C which reported

COI income of $35,247.81.   According to respondent, that amount

is includable in petitioner’s 2006 income.
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     However, the moment it becomes clear that a debt will never

be repaid, that debt must be viewed as having been discharged.

Cozzi v. Commissioner, 88 T.C. 435, 445 (1987).    Any identifiable

event that fixes the loss with certainty may be taken into

consideration.    Id. (citing United States v. S.S. White Dental

Manufacturing Co., 274 U.S. 398 (1927)); cf. sec. 1.6050P-

1(b)(2)(i), (iv), Income Tax Regs. (providing an exclusive list

of eight “identifiable events” under which debt is discharged for

information reporting purposes, including a discharge pursuant to

a foreclosure, the application of a defined policy of the

creditor to discontinue collection activity and discharge the

debt, or the expiration of a nonpayment testing period (usually

36 months)).

     The determination of whether COI has occurred is fact

specific and often turns on the subjective intent of the creditor

as manifested by an objectively identifiable event.     Cozzi v.

Commissioner, supra.    The issuance of a Form 1099-C is an

identifiable event, but it is not dispositive of an intent to

cancel indebtedness.    Owens v. Commissioner, T.C. Memo. 2002-253,

affd. in part, revd. in part and remanded 67 Fed. Appx. 253 (5th

Cir. 2003).    Moreover, a mere bookkeeping entry by a creditor

does not result in COI income.     Cozzi v. Commissioner, supra.

     In August 2000 petitioner’s home was sold in foreclosure and

the proceeds were used to partially satisfy an in rem judgment
                                 - 7 -

held by Home Equity.   The balance of the in rem judgment was held

by Home Equity for 4 months and by Citimortgage for more than 6

years after Citimortgage acquired Home Equity.       From the time of

the foreclosure in August 2000 to the issuance of the Form 1099-C

in 2007, there was no collection activity by either Home Equity

or Citimortgage.   In addition, the Form 1099-C was sent to

petitioner at the Newport address in 2007, thereby demonstrating

that collection on the debt had not been pursued since 2000.

Finally, in several cases before this Court in which a mortgage

was foreclosed upon, generating COI income, the Form 1099-C was

issued in the same year as the foreclosure, indicating that the

foreclosure was the identifiable event.       See, e.g., Jelle v.

Commissioner, 116 T.C. 63 (2001); Stoddard v. Commissioner, T.C.

Memo. 2002-31; Johnson v. Commissioner, T.C. Memo. 1999-162,

affd. without published opinion 211 F.3d 1265 (4th Cir. 2000).

     In support of respondent’s assertion that the COI occurred

in 2006, respondent relies solely on a naked Form 1099-C.

Respondent did not present one scintilla of other evidence to

support the incidence of COI income in 2006.       Respondent has not

met his burden of production under section 6201(d).        Therefore,

we hold that petitioner did not have COI income in 2006.

     To reflect the foregoing,


                                              Decision will be entered

                                         for petitioner.
