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Agreement until the total amount of Gross Guarantee
Payments made by Hospital have been repaid in full.
* * *
The practice agreement also provided that petitioner and the
hospital would agree upon repayment terms at the termination of
the agreement if there was any balance due.
In exchange “for the benefits and consideration provided by
Hospital to Physician”, petitioner agreed to operate a medical
practice of orthopedic surgery in the area for a period of at
least 3 years and to become a full member of the medical staff at
the hospital. If petitioner failed to comply with the terms of
the practice agreement, the practice agreement provided that,
upon demand by the hospital, petitioner would repay all amounts
paid to him to meet the income guarantee. The practice agreement
term began on January 1, 1993, continued for a period of 12
months, and could be renewed for an additional 12 months by
mutual consent. The practice agreement also provided that
petitioner would be an independent contractor of the hospital.
Petitioner began operating a medical practice in
Springfield, Tennessee, on September 30, 1992. Beginning in
January 1993, petitioner received funds from the hospital to
ensure a monthly gross income2 of $33,334. During 1993, pursuant
2 For convenience, we use the parties’ terms “income” and
“guarantee payments”, and use of such terms is not intended to be
conclusive as to characterization for tax purposes.
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Last modified: May 25, 2011