- 35 -
248 F.3d 572 (7th Cir. 2001). Nothing in the Court of Appeals
opinion dictates a decision in respondent's favor. See Golsen v.
Commissioner, 54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir.
1971). In affirming our holding that the taxpayer was a guarantor
rather than a lender of funds for his S corporation, the Court of
Appeals offered an analysis of the difference between a lender and
a guarantor: while both assume a risk of default, a lender
procures or supplies funds for a borrower whereas a guarantor (by
assuming the risk of default) enables funds to be supplied to the
borrower. Grojean v. Commissioner, 248 F.3d at 573. In
concluding that the taxpayer was a guarantor rather than lender,
the Court of Appeals observed:
Grojean [the taxpayer] did not procure $1.2 million for
the use of Schanno [the S corporation], as he would have
done had he gone to a bank or other lender, borrowed
$1.2 million from it, and written a check for that
amount to Schanno. [Id.]
The Court of Appeals also affirmed our conclusion (which it
construed as an alternate holding) that there was no basis-
generating direct indebtedness between the taxpayer and his S
corporation because no debtor-creditor or other contractual
relationship existed between them. Id. at 576.
Here, petitioner borrowed from Huntington--on a fully
recourse basis,25 accepting restrictive covenants to obtain the
25 In one of the subsequent modifications increasing the
outstanding principal on the Miller/Huntington Loan, Huntington
(continued...)
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