Antonio and Joyce Rosario - Page 3

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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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