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Florida Tax Review


Commissioner v. Tufts, nonrecourse debt, Section 1001, recourse debt, debt-discharge theory, Tufts


This 1992 article first explores how the concept of - 61(a)(12) debt-discharge income evolved over time from a "balance sheet improvement" rationale to one recognizing that what is properly measured under - 61(a)(12) is the prior receipt that would have been a wealth accession at that time if not for the absolute obligation to repay (without regard to balance sheet consequences). The article then goes on to explore how the Supreme Court created unnecessary mischief in Tufts v. Commissioner, 461 U.S. 300 (1983), by failing to recognize the critical differences between - 1001 "gain" or "loss" and - 61(a)(12) debt-discharge income.


Portions reprinted in Federal Income Tax Anthology, P. Caron, K. Burke, & G. McCough eds., Anderson Co. 1997

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