13
projections based on objective criteria and the value of the
security at the time the lender has a right to proceed against
the security for payment--that the obligation will be paid.
Waddell v. Commissioner, supra at 904.
The territory repayments due under the agreement were
payable only out of petitioner's commissions. Petitioner was not
otherwise required to make payments if she did not earn
sufficient commissions. Thus, the obligation was nonrecourse as
to her. The monthly withholdings were not set at any amount at
the inception of the transaction, the relevant period in our
analysis. Waddell v. Commissioner, supra. It is true that the
obligation was set at a fixed amount; however, we do not believe
this makes the obligation any less contingent. See Graf v.
Commissioner, 80 T.C. 944, 949 n.6 (1983). Petitioner's
obligation was still conditioned on her success in earning
commissions.
Petitioner argues, nonetheless, that her obligation was
"real". Both petitioner and Mr. Rigney testified that they
viewed petitioner's obligation as real. Further, petitioner
places great weight on the value of the lists, which she argues
served as collateral securing her obligation to Safeguard.
Petitioner argues that she was building equity in her interest in
the lists, and that she had an incentive to fulfill her repayment
obligation to avoid foreclosure.
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