Beck on Anderson v. Commissioner

Tuesday, October 5, 2004

Richard Beck (New York Law School) offers these thoughts on Anderson v. Commissioner, T.C. Summary Opinion 2003-169 (12/18/03):

TP lets friend use his credit card with understanding that friend will pay her own bills. She doesn’t, and TP is left holding the bag. TP negotiates a reduction of the debt with the issuing bank, and bank sends a Form 1099. Tax Court holds that TP must pay tax on debt reduction as COD income. TP (pro se) does not know enough to make the argument that he got no consideration — friend did (guarantors have no COD income for that reason when guarantee liability is reduced) — and also does not make the equally good argument that he is protected by § 108(e)(2). TP seems to have a deductible bad debt for the amount he did pay on her behalf, and TP would have had a greater one had he paid the full amount.

About the Author

Paul Caron

Paul Caron was named Duane and Kelly Roberts Dean of Pepperdine University School of Law on June 1, 2017. Dean Caron joined the Pepperdine faculty in 2013 after serving as the Dorothy and Leonard Straus Distinguished Visiting Professor of Law in the spring semesters of 2010 through 2013. He served as Associate Dean for Research and Faculty Development at Pepperdine in 2015-2017. Before coming to Pepperdine, he was Associate Dean of Faculty and Charles Hartsock Professor of Law at the University of Cincinnati College of Law.