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The restructuring of the line of credit was undertaken on
December 30, 1992. On that date, Huntington extended a $1
million revolving line of credit to petitioner personally (the
Miller/Huntington Loan) on a full recourse basis. To evidence
the indebtedness, petitioner personally executed a loan
agreement, security agreement, and full recourse promissory note
in favor of Huntington.5 On the same day, petitioner extended a
$1 million revolving line of credit to MMS (the MMS/Miller Loan).
To evidence the indebtedness, MMS executed a loan agreement,
security agreement, and promissory note in favor of petitioner.6
Petitioner drew down $750,000 of his credit line under the
Miller/Huntington Loan, lent it to MMS pursuant to the MMS/Miller
Loan, and MMS in turn used the proceeds to pay the outstanding
balance of the MMS/Huntington Loan. On its records, Huntington
recorded the MMS/Huntington Loan as satisfied in full by virtue
of a $750,000 principal payment on December 30, 1992.
Both the Miller/Huntington and MMS/Miller Loans were due on
December 31, 1993, and carried the same interest rate as the
MMS/Huntington Loan (one-half point above Huntington's prime
rate), with interest payable monthly and advance payments of
principal permitted. The Miller/Huntington and MMS/Miller Loans
5 Unless otherwise indicated, reference to the
Miller/Huntington Loan encompasses all three of these documents.
6 Unless otherwise indicated, reference to the MMS/Miller
Loan encompasses all three of these documents.
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