Sam E. Scott - Page 6

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          provided for quarterly repayments of the borrowed funds at 12-              
          percent interest, with the final installment due on July 5, 1994.           
          The note further provided:                                                  
               It is agreed that in case of default in any payment of                 
               interest, or termination of the employment of maker, or                
               the death of maker, the entire debt shall immediately                  
               become due and payable at the option of the holder                     
               hereof.                                                                
          Petitioner never made any repayments of the borrowed funds to the           
          plan.                                                                       
               At the end of 1990, Jessie Homan, an account administrator for         
          Deposit Guaranty, contacted Jerard Pitts, the business manager at           
          Heidelberg & Woodliff, to discuss petitioner's delinquent payments          
          on his loan.  Ms. Homan inquired whether the loan should be                 
          declared in default and charged off.  Mr. Pitts informed Ms. Homan          
          that petitioner was leaving the firm; they decided to charge off            
          the loan in January 1991 in accordance with the terms of the note.          
               On February 7, 1991, Deposit Guaranty issued a check for               
          $36,424.07 payable to petitioner. The check represented                     
          petitioner's balance in the plan, $85,455.49, less the amount of            
          unrepaid funds borrowed from the plan, $49,031.42.  The check was           
          mailed to Mr. Pitts and was negotiated by petitioner in 1991.               
          Petitioner failed to roll over any of the distributed funds into            
          another qualified tax-deferred account within 60 days.                      
               A Form 1099-R (Distributions From Pensions, Annuities,                 
          Retirement or Profit-Sharing Plans, IRA's, Insurance Contracts,             





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