- 10 -
Holman Jones Hospital Accounts Receivable--Other” under which is
written petitioner’s name. Upon review by the Court, they appear
to be prepared contemporaneously with each transaction. The
journal entries show amounts paid to or on behalf of petitioner
and repayments to the account. The hospital reported the
guarantee payments in the “debit” column. The hospital,
therefore, treated each guarantee payment as an asset or account
receivable; i.e., an amount that it would receive in the future.
In addition, credits are shown in the journal entries, indicating
that repayments were made to the account.
Finally, the hospital’s intent to enforce repayment of the
guarantee payments amount is demonstrated by the hospital’s
proceedings against petitioner in the U.S. District Court to
collect on the promissory note. If the hospital had not intended
to enforce repayment, the hospital would not have filed a lawsuit
on the issue in the U.S. District Court based on diversity and
then sought a summary judgment on the undisputed facts.
On the basis of the record, we conclude that the guarantee
payments advanced to petitioner constituted a loan rather than
taxable income because petitioner intended to repay the amounts
paid to him and the hospital intended to enforce repayment of the
guarantee payment amounts. We hold, therefore, that the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011