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transaction as a loan; and (9) whether the borrower was solvent
at the time of the loan. United States v. Uneco, Inc. (In re
Uneco, Inc.), 532 F.2d 1204, 1207 (8th Cir. 1976); McFadden v.
Commissioner, T.C. Memo. 2002-166; Flood v. Commissioner, T.C.
Memo. 2001-39; Mayhew v. Commissioner, T.C. Memo. 1994-310.
On the basis of the evidence in the record, we find that the
$175,000 advanced to petitioner constituted a loan and is not
taxable income. Not only was the transaction in form a loan but,
under the circumstances of this case, that was also its
substance.
Here, there was a promissory note that called for fixed
annual payments of principal and interest to be paid over a 10-
year period. The debt was secured by a mortgage on petitioner’s
real property and guaranteed in writing by Mr. Zimmerman. The
mortgage was recorded with the Office of County Recorder,
Washington County, Minnesota, on August 26, 1996. There were no
other mortgages on the property.
Amoco routinely enforced the collection of a promissory note
made by a dealer/borrower if the dealer defaulted on the note.
When a dealer abandoned a station, sold the station, or had
significant financial trouble, Amoco took steps to collect the
outstanding balance of any loan.
Respondent argues that petitioner had only a contingent
obligation to repay the advance, in that petitioner would not
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