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petitioner contends that the amended agreement and the hospital’s
proceedings against him in a U.S. District Court to collect
repayment of the guarantee payments received by him should
eliminate “any doubt regarding the treatment of the monies
advanced”.
Respondent argues that amounts paid to petitioner by the
hospital constituted gross income in 1993. Respondent contends
that nothing in the record evidences that, at the time petitioner
entered into the practice agreement, petitioner intended to repay
the guarantee payments received. Respondent also argues that the
practice agreement did not contain an unconditional obligation to
repay because it stated that any terms regarding the payback of a
balance due would be mutually agreed upon at the expiration of
the term.
Gross income includes all income from whatever source
derived, encompassing all “accessions to wealth, clearly
realized, and over which the taxpayers have complete dominion”.
Sec. 61(a); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431
(1955). Generally, proceeds of a loan do not constitute income
to a borrower because the benefit is offset by an obligation to
repay. United States v. Rochelle, 384 F.2d 748, 751 (5th Cir.
1967); Arlen v. Commissioner, 48 T.C. 640, 648 (1967). Whether a
particular transaction actually constitutes a loan, however, is
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