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ample support for this finding. In support of his assertion that
the Bank lent the funds to him, petitioner focuses primarily on
Petitioner's Note and asserts that this note establishes that he
was primarily liable for the repayment of the Loan. We disagree.
We read Petitioner's Note to be nothing more than another form of
security required by the Bank as a precondition to making the
$500,000 loan to EPC. In addition to the fact that Petitioner's
Note stated specifically that it did not create a separate
indebtedness, we read Petitioner's Note as well as every other
document connected with the Loan to state clearly that EPC was
the debtor and that petitioner was a guarantor. Nor do we find
anything in the record to persuade us that petitioner and EPC had
a debtor/creditor relationship during the relevant year. As a
point of fact, EPC's 1982 and 1983 Form 1120, U.S. Corporation
Income Tax Return, stated explicitly that neither EPC nor
petitioner owed the other anything during the period from
September 1, 1982, through August 31, 1984. We conclude, as we
have found, that the Bank made the Loan to EPC, and that
petitioner guaranteed the Loan.
With this conclusion in mind, we turn to the income tax
consequences that flow from petitioner's position as a guarantor.
A guarantor may deduct a debt that he or she guaranteed when the
guarantor's liability for the debt is certain and he or she
actually pays it. See Helvering v. Price, 309 U.S. 409 (1940);
Eckert v. Burnet, 283 U.S. 140 (1931). If the guarantor
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