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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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