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Since Henry and Esther were not guarantors of the loans at
issue in this case, their reliance on Landreth, Payne, and
Whitmer does not help them.
II. Whether Henry May Reduce the Gross Amount of the Option
Price Paid to Him or for His Benefit Pursuant to the Option and
Stock Purchase Agreement by $150,000, the Amount Allegedly Owed
and Paid to Bryan
The clear language of the EOA indicates that “In
consideration of the grant of the Option by HM to HJA, HJA shall
pay to HM the sum of * * * ($300,000.00)”. Indeed, there is no
dispute that Henry received $286,411 in 1990 for the option. The
only dispute is whether Henry may exclude from his 1990 taxable
income $150,000 of the $286,411 option payment.
Henry and Esther claim in this case that the remaining
$150,000 of the option payment was owed to Bryan for HJA stock
that Bryan acquired in 1990 from Henry. Respondent disagrees,
claiming that the full amount of the option price must be
reported by Henry as investment income on his 1990 Federal income
tax return. We agree with respondent.
The record overwhelmingly supports respondent’s position
that Henry received the $150,000 as part of the consideration
paid by HJA for the option to purchase Henry’s stock under the
EOA and that the subsequent payment by Henry to Bryan of a
portion of that consideration was a loan repayment to Bryan.
When the EOA giving HJA an exclusive option to purchase all of
Henry’s 10,000 shares of HJA’s stock was executed, Bryan, a party
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