                  T.C. Summary Opinion 2009-91



                       UNITED STATES TAX COURT



                TIMOTHY W. FULLER, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8028-08S.                Filed June 8, 2009.



     Jay T. Schweitzer, for petitioner.

     Michael W. Bitner, 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 $1,941 in petitioner’s

Federal income tax for his taxable year 2006.

     We must decide whether petitioner is entitled for his

taxable year 2006 to exclude from his gross income discharge of

indebtedness of $6,098.2    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.

     On February 12, 2001, petitioner and his then spouse,

Gaylene Fuller (Ms. Fuller), purchased a used 1999 Pontiac Grand

Am automobile (Pontiac Grand Am), financed that purchase by

borrowing $12,328.15, and executed a retail installment sale

contract (February 12, 2001 sale contract) with respect to that

purchase.   Pursuant to that contract, petitioner and Ms. Fuller

agreed to pay the $12,328.15 that they borrowed over a 66-month

period that began on March 14, 2001.       Pursuant to the February

12, 2001 sale contract, the seller’s interest in that contract

and the related security agreement were assigned to Triad Finan-

cial Services (Triad).     (We shall refer to the obligation of

petitioner and Ms. Fuller to Triad as of the time the seller’s


     2
      There are other questions relating to certain determina-
tions in the notice of deficiency that respondent issued to
petitioner for his taxable year 2006 that are computational in
that their resolution flows automatically from our resolution of
the issue that we address herein.
                                - 3 -

interest in the February 12, 2001 sale contract and the related

security agreement were assigned to Triad as the debt to Triad.)

     On May 19, 2004, pursuant to a decree of dissolution of

marriage that the District Court for Washington County, Iowa

(Washington County district court), entered on that date, the

marriage between petitioner and Ms. Fuller was dissolved.    In

connection with the dissolution of their marriage, petitioner and

Ms. Fuller executed a stipulation that they filed with the

Washington County district court.   That stipulation provided in

pertinent part that Ms. Fuller was to be responsible for the

payment of the debt to Triad.

     At a time not disclosed by the record, Ms. Fuller failed to

make the payments required with respect to the outstanding debt

to Triad, and the Pontiac Grand Am was repossessed.   On a date

not disclosed by the record, a representative of Triad contacted

petitioner in an attempt to collect that outstanding debt.

     On May 11, 2006, Triad canceled the outstanding debt to

Triad.   Thereafter, Triad issued to petitioner Form 1099-C,

Cancellation of Debt (Triad’s Form 1099-C), with respect to his

taxable year 2006.   In that form, Triad showed that petitioner

had $6,098 of debt canceled.

     Petitioner filed electronically Form 1040, U.S. Individual

Income Tax Return, for his taxable year 2006.   In that return,

petitioner did not include in gross income the $6,098 of debt
                                  - 4 -

canceled that Triad showed in Triad’s Form 1099-C issued to

petitioner for his taxable year 2006.

     Respondent issued a notice of deficiency to petitioner for

his taxable year 2006.   In that notice, respondent determined

that petitioner has cancellation of debt income of $6,098.

                            Discussion

     Petitioner bears the burden of proving error in the determi-

nation that he has cancellation of debt income of $6,098.3    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 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


     3
      Petitioner does not argue that the burden of proof shifts
to respondent under sec. 7491(a). However, he takes the position
on brief that respondent has the burden of establishing that the
debt to Triad was enforceable under the law of the State of Iowa
(Iowa law). In support of that position, petitioner relies on
Zarin v. Commissioner, 916 F.2d 110 (3d Cir. 1990), revg. 92 T.C.
1084 (1989). Zarin is materially distinguishable from the
instant case, and petitioner’s reliance on that case is mis-
placed. In Zarin v. Commissioner, 92 T.C. 1084 (1989), we
addressed whether the taxpayer or the Commissioner of Internal
Revenue (Commissioner) bore the burden of proof with respect to
the discharge of indebtedness (DOI) issue involved in that case.
We held that, because the DOI issue constituted a new matter, the
Commissioner bore the burden of proof with respect to that issue.
Id. at 1088-1089. With no discussion of the burden of proof
question, the United States Court of Appeals for the Third
Circuit proceeded in Zarin v. Commissioner, 916 F.2d 110 (3d Cir.
1990), on the assumption that the Commissioner bore the burden of
proof with respect to the DOI issue involved in that case.
                                - 5 -

would be includible in gross income by reason of the discharge in

whole or in part of indebtedness 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
           basis of the taxpayer’s assets and liabilities
           immediately before the discharge.

     In support of his position that he does not have $6,098 of

DOI income for his taxable year 2006, petitioner argues that the

outstanding debt to Triad was not enforceable under Iowa law and

that he was insolvent at the time of the discharge of that debt.

     We turn first to petitioner’s argument that the outstanding

debt to Triad was not enforceable under Iowa law.     Petitioner

presented no evidence and provided no legal authority supporting

that argument.    On the record before us, we find that petitioner

has failed to carry his burden of establishing that the outstand-

ing debt to Triad was not enforceable under Iowa law.
                               - 6 -

     We turn now to petitioner’s argument that he was insolvent

at the time of the discharge of the outstanding debt to Triad.

In support of that argument, petitioner relies on his conclusory

and uncorroborated testimony regarding certain assets that he

owned at that time.4   We are not required to, and we shall not,

rely on petitioner’s testimony to establish the nature and the

fair market value of each of his assets and the nature and the

outstanding amount of each of his liabilities immediately before

the discharge of the outstanding debt to Triad.    See, e.g.,

Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).    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 that discharge.

     Based upon our examination of the entire record before us,

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

lishing that he does not have $6,098 of DOI income for his

taxable year 2006.




     4
      It appears that it is petitioner’s position that the term
“assets” as used in sec. 108(d)(3) does not include assets that
are exempt from the claims of creditors under Iowa law. Accord-
ing to petitioner, the pickup truck that he owned at the time of
the discharge of the outstanding debt to Triad was exempt from
the claims of creditors under Iowa law and therefore is not to be
included in determining under sec. 108(d)(3) the assets that he
owned immediately before that discharge. In support of his
position, petitioner relies on Hunt v. Commissioner, T.C. Memo.
1989-335. We reject petitioner’s position, including his reli-
ance on Hunt. See Carlson v. Commissioner, 116 T.C. 87 (2001).
                                 - 7 -

     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.

     To reflect the foregoing,


                                         Decision will be entered for

                                 respondent.
