Forgiven loan

[rttax]

Need help on this question in following situation:
A physician client joined the group practice with OR previlege with local Hospital. The Service Contract stated that the Hospital will give $25000 towards the remuneration as a loan to be written off over a period of 2 years (1/24 th per month) which for 2006 comes to $6250. My question: is this self employed income on which SE and MC taxes are due or forgiven loan? Hospital has not issued any information forms. The whole amount ($25000) was given in 4 instalments in 2006.

[OldJack]

Not sure I understand the deal.

It appears that the hospital is loaning $25,000 to the Group Practice, Inc., as an amount to reimburse them for what they pay the individual doctor and if the doctor stays practicing at the hospital they will forgive the loan over a 2 year period of practice. Is this what is taking place? Any write-off of the loan would normally be ordinary business income to whoever got the loan proceeds in the first place.