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provisions, indicates that the transaction is merely a financing
arrangement. H. Conf. Rept. 998-861, supra at 1063, 1984-3 C.B.
(Vol. 2) at 317.
Respondent concedes that the written terms of the
Agreements: (1) Prevented petitioner from unilaterally
terminating the Agreements and (2) obligated Guardian to pay
petitioner a recapture fee only if Guardian terminated the
Agreements in the initial period. Respondent claims, however,
that the parties’ understanding was to the contrary. According
to respondent, Guardian and petitioner understood that Guardian
would terminate the Agreements at petitioner’s request.
Respondent also claims that Guardian, upon terminating the
Agreements, intended to make petitioner whole for any losses
suffered.
The record does not support respondent’s assertion that
there was an unwritten understanding concerning the termination
or recapture of the Agreements. Under the terms of the
Agreements, recapture would occur solely at Guardian’s option.
Both Agreements contained an explicit early recapture provision,
of the kind reflecting “a business practice” as described in the
conference report. Neither Agreement had a payback provision of
the sort which the conference report finds indicative of a mere
financing arrangement.
This factor favors petitioner.
vi. Relative Tax Positions
The relative tax positions of the parties is a factor to be
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