Timothy J. Coburn - Page 12

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          collateral securing a recourse liability upon the debtor’s                  
          default on the liability, alone, does not extinguish the                    
          underlying liability.  Lockwood v. Commissioner, 94 T.C. 252, 260           
          (1990).  Unlike collateral securing a nonrecourse liability, the            
          collateral securing a recourse liability does not represent the             
          only source of repayment.13  In the instant case, the loan                  
          documents provide CareMatrix with the right to enforce                      
          petitioner’s repayment of the loan, irrespective of whether                 
          petitioner abandoned the collateral to CareMatrix.14                        

               13Black’s Law Dictionary 1086 (7th ed. 1999) provides the              
          following definitions of a recourse note and a nonrecourse note:            
               recourse note.  A note that may be satisfied upon                      
               default by pursuing the debtor’s other assets in                       
               addition to the collateral securing the note.  Cf.                     
               nonrecourse note.                                                      
               nonrecourse note.  A note that may be satisfied upon                   
               default only by means of the collateral securing the                   
               note, not by the debtor’s other assets.  Cf. recourse                  
               14We recognize, and petitioner does not dispute, that the              
          terms of the loan documents on their face provide for a recourse            
          liability.  Petitioner instead contends that the loan is                    
          nonrecourse based upon two alternative contentions.  The first              
          contention is that the substance rather than the form of the                
          transaction should govern and that the underlying facts and                 
          circumstances support the conclusion that the loan is                       
          nonrecourse.  Alternatively, petitioner contends that the parties           
          intended for the loan to be nonrecourse, that the parties made a            
          mutual mistake in executing a promissory note that did not                  
          accurately reflect their intent, and that the terms of the loan             
          documents should be reformed to accurately reflect such intent.             
          Petitioner contends that petitioner “transferred” the collateral            
          to CareMatrix in satisfaction of a nonrecourse liability, that              
          the “transfer” of the collateral is properly treated as the sale            

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