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scenario the limited partners of Petunia likely would be required
to make payments on Petunia’s debt obligations to F.S. Venture.
In that scenario, on the basis of the relationships between the
various parties, the guaranties of FSC, the Commitment and Side
Agreements, and the suspension and setoff provisions of the
agreement between F.S. Venture and Petunia, we believe the
limited partners of Petunia would have legal defenses against
FSC, F/S Computer, F.S. Venture, and MHLC that would protect the
limited partners of Petunia from any realistic obligation to make
any actual payments under the Partnership Note.
Further, the hypothetical inability of a guarantor such as
FSC to satisfy guaranty obligations due to bankruptcy or
insolvency generally is not to be considered in applying section
465(b)(4) unless it contributes to a realistic possibility of
economic loss. Thornock v. Commissioner, 94 T.C. 439, 454
(1990); Capek v. Commissioner, 86 T.C. 14, 52 (1986); S. Rept.
94-938 at 50 n.6 (1976), 1976-3 C.B. (Vol. 3) 49, 88; see also
Van Roekel v. Commissioner, T.C. Memo. 1989-74, 56 T.C.M. (CCH)
1297, 1307-1308, 1989 T.C.M. (P-H) par. 89,074, at 89-341; Young
v. Commissioner, T.C. Memo. 1988-440, affd. 926 F.2d 1083 (11th
Cir. 1991), with regard to the significance of a parent
corporation’s guaranty of its subsidiary’s debt obligation.
We do not believe that under any of petitioner’s suggested
scenarios Petunia and its limited partners would be held liable
for the debt obligations associated with this transaction.
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