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had the following options for the repayment schedule: Minimum
repayment, repay in 5 years or less, a specific repayment amount
per pay period, or a specified number of repayments. The
following warning appears on the application above the repayment
schedule section:
PLEASE READ THIS INFORMATION BEFORE
MAKING YOUR SELECTIONS
Federal tax law provides that where the total
outstanding loan is either greater than $50,000 or the
term of repayment exceeds 5 years, or if the loan is
subsequently not repaid, the loan is subject to a
determination as to whether any part of it constitutes
a taxable distribution.
Between 1962 and 1978, petitioner borrowed funds from the
plan totaling $8,931, including interest. Petitioner borrowed
funds from the plan on 32 separate occasions between March 29,
1979, and March 2, 2000. When each new loan was made, any
existing loans were rolled into the new loan. At issue are the
28th and 29th loans. The 28th loan was made on February 6, 1997,
in the amount of $3,960. By the terms of the February 6, 1997,
loan, petitioner agreed to pay $110.73 biweekly over 999 pay
periods. The 29th loan was made on April 17, 1997, in the amount
of $690. Once again, all existing loans were rolled into the new
loan. By the terms of the April 17, 1997, loan, petitioner
agreed to pay $112.33 biweekly over 999 pay periods. Petitioner
selected the minimum repayment option in the aforementioned
loans.
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