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from the CPA on the 15 years with each year on it
so that we will know the balance to be paid when
the loan is supposed be paid off.
Also on November 16, 1994, petitioner executed a promissory
note which he prepared evidencing the terms of the loan. The
note provided that petitioner was borrowing $25,000 from the plan
at an annual interest rate of 9 percent. With respect to
repayment terms, the note provided that petitioner was to make
monthly payments at the rate of $253.57. Petitioner
inadvertently omitted from the promissory note the term requiring
a balloon payment at the end of 5 years. Nonetheless, at the
time of signing the promissory note, petitioner intended to repay
the loan at the end of 5 years through a balloon payment of the
then outstanding principal balance.3
In order that he would know the proper amount of the balloon
payment, petitioner requested the accounting firm of Hill,
D’Amore & Co., Ltd., to prepare an amortization schedule for the
loan. The amortization schedule, bearing the letterhead of
petitioner’s accountant and dated November 21, 1994, reflected
the following items: A loan date of November 16, 1994; a loan
balance of $25,000; a nominal annual interest rate of 9 percent;
3 Respondent does not dispute petitioner’s assertion that
at the time the promissory note was executed, petitioner intended
to satisfy the loan through a balloon payment at the end of 5
years.
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