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Background
The parties submitted this case fully stipulated pursuant to
Rule 122.1 The stipulation of facts and the attached exhibits
are incorporated herein by this reference. At the time the
petition was filed, petitioners resided in Marion, Ohio.
Petitioner Antonio Rosario (hereinafter, petitioner) is an
orthopedic surgeon. The hospital is located in Springfield,
Tennessee. To induce petitioner to practice in the Springfield
area, petitioner and the hospital executed a Professional
Practice Agreement (the practice agreement) on September 30,
1992. The practice agreement provided, in part:
Income Guarantee. Hospital guarantees that,
during the term of this Agreement, Physician’s gross
income (defined as collected professional fees) will
not be less than Thirty-Three Thousand Three Hundred
Thirty-Four Dollars ($33,334.00) per month. To the
extent that Physician’s gross income in any month
during the term of this Agreement is less than
$33,334.00, the Hospital will pay Physician by the
tenth day of the closing of the Physician’s books for
that month any amount sufficient to raise Physician’s
income for that month to $33,334.00 (such payment by
Hospital, will be referred to as a “Gross Guarantee
Payment”). If, during any month of the term of this
Agreement, Physician’s income is greater than
$33,334.00, Physician will pay to Hospital by the tenth
day after the closing of Physician’s books for the
month, the excess over $33,334.00, to the extent
necessary to reimburse hospital for Gross Guarantee
Payments previously paid. Such payments by Physician
will be made to the Hospital during the term of this
1 All section references are to the Internal Revenue Code
in effect for the year in issue, and all Rule references are to
the Tax Court Rules of Practice and Procedure. Amounts are
rounded to the nearest dollar.
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Last modified: May 25, 2011