- 12 - the inception of the net recovery buyout recapture agreement, then in accordance with the terms of that agreement, petitioners could be required to repay part or all of the $177,722 written off by FmHA. If petitioners chose not to dispose of their property, then, of course, nothing further would be due. Petitioners’ obligation was thus “highly contingent” in every sense of the word. This state of affairs fits perfectly within the precept formulated in Zappo v. Commissioner, supra, that a highly contingent obligation will not be treated in pari materia with a more conventional counterpart. Petitioners’ initial debt to FmHA, the “conventional counterpart” in this case, was fixed in amount, bore a stated rate of interest, and required periodic payments. In contrast, petitioners’ liability under the recapture agreement had no certain amount, was not interest bearing, and mandated no definite payments. An enforceable financial obligation may in fact never materialize at all. Faced with these differences, we cannot reasonably view the latter alleged debt as a mere substitute for the former. We are convinced that the rationale of United States v. Kirby Lumber Co., 284 U.S. 1 (1931), is particularly applicable here where the recapture agreement leaves petitioners in complete control of their assets and free to arrange their affairs so that none of their property’s value need ever be delivered to FmHA.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Next
Last modified: May 25, 2011