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Accordingly, we hold that Henry and Esther were the primary
obligors on the FirsTier note and that the payments made by HJA
on the FirsTier note were taxable as ordinary income to Henry and
Esther in the years determined by respondent and were deductible
by HJA.
2. Chevrolet Debt
Whether Henry was an accommodation party with respect to the
Chevrolet debt depends, in the first instance, on whether the
dissolution of partnership agreement qualifies as a negotiable
instrument under Nebraska law. See Neb. Rev. Stat. U.C.C. sec.
3-104(b), which defines the term “instrument” used in Neb. Rev.
Stat. U.C.C. sec. 3-419(a) to mean “negotiable instrument.”
Neb. Rev. Stat. U.C.C. section 3-104(a) provides that an
instrument is negotiable if the following requirements are met:
(1) The promise or order must be unconditional; (2) the amount of
money must be “a fixed amount of money, with or without interest
or other charges described in the promise or order”; (3) the
promise or order must be “payable to bearer or to order”; (4) the
promise or order must be payable “on demand or at a definite
time”; and (5) the promise or order must not state “any other
undertaking or instruction by the person promising or ordering
payment to do any act in addition to the payment of money”, with
exceptions that do not apply in this case.
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