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Hospital, will be referred to as a “Gross Guarantee
Payment”). If, during any month of the term of this
Agreement, Physician’s income is greater than
$33,334.00, Physician will pay to Hospital by the tenth
day after the closing of Physician’s books for the
month, the excess over $33,334.00, to the extent
necessary to reimburse hospital for Gross Guarantee
Payments previously paid. Such payments by Physician
will be made to the Hospital during the term of this
Agreement until the total amount of Gross Guarantee
Payments made by Hospital have been repaid in full.
The main ambiguity in the practice agreement was that the above
language could have been construed to favor respondent’s view
that petitioner would have to repay the hospital only to the
extent his monthly income were over $33,334; therefore, the
guarantee payments would not be characterized as a loan because
there would not be an unconditional obligation for petitioner to
pay them back. United States v. Henderson, 375 F.2d 36, 39 (5th
Cir.1967); Bouchard v. Commissioner, 229 F.2d 703 (7th Cir.
1956), affg. T.C. Memo. 1954-243; Haag v. Commissioner, 88 T.C.
604, 615-616 (1987), affd. without published opinion 855 F.2d 855
(8th Cir. 1988). The above language also could have been
construed to favor petitioner’s view that it required petitioner
to pay back the guarantee payments in all events, which would
support characterizing the payments as a loan.
On January 1, 1994, petitioner and the hospital signed an
amended practice agreement that provided:
Hospital intended that Physician, upon expiration of
the Income Guarantee, be required to repay that portion
of the Income Guarantee not repaid pursuant to the
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