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upon commencement of his employment, petitioner received $103,000
as a loan from Dean Witter. As reflected in a promissory note
signed by petitioner, beginning in 1989 this loan was to be
repaid by petitioner in three annual installments of
approximately $34,333 each, plus 10-percent annual interest, for
a total annual payment due of $37,767.
Under the terms of the loan agreement, as long as petitioner
worked for Dean Witter during 1989 through 1991, petitioner would
receive a yearend bonus in the amount of $37,767, which
petitioner was required to return to Dean Witter, via a personal
check, in order to cover the annual $37,767 payment due on the
$103,000 loan from Dean Witter. Of the $37,767 annual payment
due, $3,433 reflected interest due on the loan.
On his 1988 Federal income tax return, petitioner did not
report the $103,000 loan proceeds received as income. For 1988,
Dean Witter also apparently treated the $103,000 as a loan to
petitioner.
For 1989 and 1990, the record does not indicate how
petitioner and Dean Witter treated the $37,767 yearend bonuses
received by petitioner. For 1991, Dean Witter included the
$37,767 yearend bonus paid to petitioner in the "wages" portion
of the Form W-2 that it issued to petitioner for 1991.
On August 2, 1991, petitioner filed for bankruptcy.
Petitioner's bankruptcy proceedings were closed on December 23,
1991.
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