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* * * * * * *
In the instant case, Petitioner has demonstrated
that all the indicia of a loan as well as a true
creditor-debtor relationship existed. A Promissory
Note was signed * * *; the Note called for interest on
the unpaid balance at the rate of prime plus 1% * * *;
the Note was to be repaid in six annual payments of
$250,000 each commencing on April 16, 2000 and continu-
ing on the third Friday of each April thereafter
through and including April 16, 2005 * * * the Peti-
tioner granted Super Rite a security interest in
(i) all inventory, (ii) all accounts, (iii) all equip-
ment, including without limitation, all machinery,
equipment, furnishings and fixtures of any kind and
nature and description, and (iv) all proceeds of the
foregoing * * *; Petitioner recorded the $1.5 million
Promissory Note as a long term note payable * * *; at
the time of the transaction, Petitioner considered the
$1.5 million as a loan * * *
* * * * * * *
There was no guarantee in April of 1999 that the
Petitioner would meet the purchase obligations or other
obligations under the Supply and Requirements Agree-
ments for the ensuing six years. Accordingly, there
was no guarantee that the future debt service payments
would be forgiven. Without any guarantee that Peti-
tioner would be allowed to keep the funds, there is no
income from the loan unless and until such time a debt
service payment is forgiven. “In determining whether a
taxpayer enjoys ‘complete dominion’ over a given sum,
the crucial point is not whether his use of the funds
is unconstrained during some interim period. The key
is whether the taxpayer has some guarantee that he will
be allowed to keep the money.” C.I.R. v. Indianapolis
Power & Light Company, 493 U.S. 203, 110 S. Ct. 589.
If Super Rite had filed for bankruptcy, the Supply
and Requirements Agreement could be canceled * * *.
Had Super Rite declared bankruptcy, they [petitioner]
would have been under default under the Supply and
Requirements Agreement and accordingly, all amounts due
under the Note would have been immediately due and
payable. If the Petitioner was unable to meet their
payment obligations * * * under the Supply and Require-
ments Agreement and such default remained uncured for a
period of 30 days, Super Rite could cancel the Agree-
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