3
NOW, THEREFORE, in consideration of her [sic]
premises [sic] and of the mutual covenants and
agreements set forth herein, BHATIA makes the following
undertakings and agreements:
1. BHATIA hereby undertakes, assumes and agrees
to perform, pay or discharge when due, to the extent
not heretofore performed, paid or discharged, all
obligations of ABDC to GCC in the amount of
$244,500.00.
2. It is expressly understood that BHATIA is not
hereby assuming, or agreeing to perform, pay or
discharge any liability of ABDC other than the
obligations specifically identified [sic] in paragraph
1 hereinabove.
3. The assumption of the obligations set forth in
this ASSUMPTION AGREEMENT shall be construed as a valid
obligation of ABDC to BHATIA in the amount of the
obligation assumed.
45[sic] This ASSUMPTION AGREEMENT shall be
interpreted in accordance of [sic] with the Laws of the
State of New York and shall bind and enure to the
benefit of the parties, their heirs, successors and
assigns.
Petitioner signed the assumption agreement in his individual
capacity, as president of ABDC, and as president of GCC. In
connection with the recited obligations of ABDC to GCC,
petitioner to GCC, and ABDC to petitioner, the record contains no
evidence that any promissory notes were issued, collateral
pledged, or interest rate or repayment schedule established. No
payments were ever made by petitioner to GCC pursuant to the
obligation recited in the assumption agreement.
ABDC reported a net operating loss in the amount of $169,602
on its 1987 Form 1120S, U.S. Income Tax Return for an S
Corporation. GCC reported net income of $256,572 on its 1987
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