Ramon A. Garcia and Bertha E. Garcia - Page 18

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             period under the terms of the note.  Rather, the                         
             Commissioner found that all parties to the loan knew that                
             the trustee intended to exercise his unilateral authority                
             to extend it.  In concluding that the loan was modified                  
             after December 31, 1986, the Commissioner stated:                        

                  [The taxpayer] acknowledges that the delay                          
                  in payment was discussed with the [other                            
                  participants in the plan] and the [other                            
                  participants] knew that no attempt would be                         
                  made to demand payment.  Therefore, it appears                      
                  that the provision in the original loan giving                      
                  the trustee unilateral authority to extend the                      
                  loan was acted on, and the document [containing                     
                  the written extensions] indicates the trustee did                   
                  extend the loan.  Even if the extension agreement                   
                  was prepared after the fact, it appears in this                     
                  closely held company that all parties involved                      
                  knew that the trustee was extending the loan.                       
                  Accordingly, the loan is to be treated as a new                     
                  loan on the date of extension, and is therefore                     
                  subject to the level amortization requirement.                      
                  [Tech. Adv. Mem. 93-44-001 (November 5, 1993).]                     

                  In contrast, there is no evidence in this case that                 
             the parties to the loan transactions intended or agreed to               
             modify or change the terms of the loans after December 31,               
             1986, and thus there is no basis to find that the 1986 Act               
             amendments are applicable.  First, petitioners stipulate                 
             that there is no written document or notation evidencing a               











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