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provided the collateral and were comakers on the note, they
substantively received the loan and then made a separate loan to
the corporation. The court indicated that Raynor would apply
only if it was first determined that there was no economic
outlay. There, because no loan repayments had been made by the
shareholders, the court found that no economic outlay had been
made and applied Raynor.
Next the court analyzed whether the taxpayers were
accommodation parties or principal debtors on the note. An
accommodation party "'is one who signs the instrument in any
capacity for the purpose of lending his name to another party to
it'". Harrington v. United States, supra at 57 (quoting Del.
Code. Ann. tit. 6, sec. 3-415). A surety is an accommodation
party, while a principal obligor is not. Finding that the
parties there were comakers on the note, the court looked to the
actual note to discern the intent of the parties. Unable to find
such an intent, the focus shifted to who was the principal
beneficiary of the proceeds of the note. The court there found
that the corporation was the primary beneficiary, despite some
draws by the shareholders personally on the line of credit, and
therefore the shareholders were accommodation parties.
If there is not an economic outlay, then we must determine
whether petitioner was an accommodation party on the notes to
which he was a comaker. If petitioner is an accommodation party
to DRPC on the bank notes, then he is not entitled to basis for
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