-22--22-
Raiders did not construct the suites, the LAMCC was without a
source for repayment.
Respondent points out that courts, including this Court,
have recognized the concept that, to be a valid debt for tax
purposes, there must exist an unconditional obligation to repay.
See, e.g., Midkiff v. Commissioner, 96 T.C. 724, 734-735 (1991),
affd. sub nom. Naguchi v. Commissioner, 992 F.2d 226 (9th Cir.
1993) (quoting Howlett v. Commissioner, 56 T.C. 951, 960 (1971)
(“Indebtedness is ‘an existing, unconditional, and legally
enforceable obligation for the payment of a principal sum.’”)).
The Raiders’ obligation to repay the LAMCC was both conditional
and contingent in these cases. Because the Raiders had the
ability to control the repayment, the Raiders’ dominion and
control over the funds at the time they received them was
sufficient to require their inclusion in the Raiders’ gross
income.
No evidence was presented to indicate that the LAMCC sought
to enforce the Raiders’ agreement to build the suites prior to
the Raiders’ announcement of their intention to move to Irwindale
in late 1987. Petitioners presented testimony of representatives
of both the Raiders and the LAMCC, purportedly to show the intent
to repay and to enforce repayment. The testimony is ambiguous
and is contradicted in many respects by documentary exhibits.
The objective manifestations of intent in this instance are more
persuasive to us.
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