In order for a taxpayer to be considered the "owner" of property for income tax purposes, it may not be sufficient that the taxpayer merely hold title to the property. Where the acquisition of the property was financed with nonrecourse indebtedness and the lender has recourse only against the property itself and not against the nominal owner, the tax law may not respect the taxpayer's nominal ownership, unless the taxpayer has an equity investment in the property which could not prudently be abandoned.
Many courts have tested for the presence of a true equity investment by comparing the amount of nonrecourse debt on the date of the property's acquisition with the fair market value of the property on that date. Where the debt exceeded that fair market value, the property might well be abandoned by the taxpayer; in such a case, therefore, the taxpayer might not be treated as the owner of the property. However, where the fair market value equalled or exceeded the amount of debt on the
