Antonio and Joyce Rosario - Page 10

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          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                    

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