Clayton W. Plotkin - Page 5




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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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