Erickson Post Acquisition, Inc. - Page 10

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          1996.  On the other hand, respondent asserts that petitioner                
          received $175,000 as an inducement or incentive to purchase and             
          distribute Amoco products, and as such, the Amoco advance was               
          income to petitioner in 1996.                                               
               For Federal income tax purposes, a transaction will be                 
          characterized as a loan if there was “an unconditional obligation           
          on the part of the transferee to repay the money, and an                    
          unconditional intention on the part of the transferor to secure             
          repayment”.  Haag v. Commissioner, 88 T.C. 604, 616 (1987), affd.           
          without published opinion 855 F.2d 855 (8th Cir. 1988); see also            
          Midkiff v. Commissioner, 96 T.C. 724, 734-735 (1991), affd. sub             
          nom. Noguchi v. Commissioner, 992 F.2d 226 (9th Cir. 1993);                 
          Howlett v. Commissioner, 56 T.C. 951, 960 (1971).  We look to               
          both testimony and objective facts to ascertain intent.  Busch v.           
          Commissioner, 728 F.2d 945, 948 (7th Cir. 1984), affg. T.C. Memo.           
          1983-98; Commissioner v. Makransky, 321 F.2d 598, 600 (3d Cir.              
          1963), affg. 36 T.C. 446 (1961).                                            
               For a payment to constitute a loan, at the time the payment            
          is received the recipient must intend to repay the amount and the           
          transferor must intend to enforce repayment.  Haag v.                       
          Commissioner, supra at 615; Beaver v. Commissioner, 55 T.C. 85,             
          91 (1970).  Further, the obligation to repay must be                        
          unconditional and not contingent on a future event.  United                 
          States v. Henderson, 375 F.2d 36, 39 (5th Cir. 1967); Bouchard v.           






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