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the lender must intend to enforce repayment. See Haag v.
Commissioner, 88 T.C. 604, 615 (1987), affd. without published
opinion 855 F.2d 855 (8th Cir. 1988).
The record reflects that Winston did not intend to enforce
repayment of the advances made to petitioner. The most
compelling indication of this fact is that Winston included the
full amount of the advances in petitioner’s Form K-1 for the
partnership’s tax year ending January 31, 1993. Winston also
refused Mr. Knoll’s request to recharacterize the payments as a
loan or as a payment for a release of a tort-type personal injury
claim. In addition, section 2(f) of the final settlement
agreement allocates the $48,420 of payments as in satisfaction of
items including “salary, draw, guarantee, bonus * * * partnership
income or profits, fees, fee participation”. These facts do not
support characterizing the proceeds as a loan.
Other facts add additional support for the conclusion that
Winston did not intend the advances to be loans. Petitioner
signed acknowledgments of receipt each time he received a payment
from Winston. Notably, the forms did not include terms of
repayment, did not require petitioner to pay interest, and did
not require petitioner to pledge collateral. While the
acknowledgments stated that each payment would be recaptured from
any lump-sum payment the firm may agree to pay petitioner, in
light of other more compelling evidence, this fact is not
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