Harvard Stevens Case

face serious penalties, legal fees, and even go to jail. In support of exclusions from gross income relating to discharge of indebtedness, Stevens v. Commissioner 2008 is a primary example as the court case was held in the United States Tax Court. Gerard Stevens was held responsible for determining a $21,323 deficiency in his Federal Income Tax for 2003 and the argument was whether Stevens failed to include in income his discharge of indebtedness or if he was liable for the accuracy-related penalty under section 6662(a). In 2002, Stevens purchased real property in Illinois which is a recourse state and the property was purchased for investment purposes by Stevens and his wife as joint tenants. As they were unable to make mortgage payments
Meaning, if a taxpayer asserts a reasonable dispute with respect to any item of income reported on return filed and the taxpayer has cooperated with the Secretary, then the Secretary shall have the burden of proof to produce reasonable and probative information concerning such deficiency in addition to such information return, as stated in IRC 6201(d) (IRC 3675). In addition, according to IRC Section 1001(b), the gain or loss realized from the sale or disposition of property shall be the sum of any money received plus the FMV of the property (IRC 2707). In this case, Stevens’ gain is pursuant to IRC Section 1001(a) where the gain from sale on property is the excess of the amount realized therefrom over the adjusted basis (IRC 2707). In accordance to Income Tax Regulations 1.1001-2(a) (2), the amount realized from the property was just under $256,000 reduced by the amount of discharged indebtedness. In summary, the Stevens’ amount realized for the property were $181,461, no capital loss on the sale, and $74,494 of ordinary income from discharge of indebtedness subject to IRC Section