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payments to a partner for services * * * shall be
considered as made to one who is not a member of the
partnership, but only for the purposes of section 61(a)
(relating to gross income), and, subject to section
263, for purposes of section 162(a) (relating to trade
or business expenses).
Whether a partner is acting in his capacity as a partner
while providing services to his partnership is a factual
determination. Falconer v. Commissioner, 40 T.C. 1011, 1015
(1963). The regulations indicate: "In all cases, the substance
of the transaction will govern rather than its form." Sec.
1.707-1(a), Income Tax Regs. The inquiry under section 707(c) is
whether the payments for petitioner's services were determined
"without regard to the income of the partnership." Falconer v.
Commissioner, supra at 1016; see also sec. 1.707-1(c), Income Tax
Regs.
We are satisfied that the facts of this case clearly place
the payments made to petitioner pursuant to the "Ongoing
Financial and Tax Analysis, and Investment Counseling
[Agreements]", within the ambit of the term "guaranteed payments"
pursuant to section 707(c). Petitioner contracted with each
partnership to provide the latter with financial consulting
services for a fixed fee. The fees were not dependent upon the
profits of the partnerships. Therefore, the fees were determined
"without regard to the income of the [partnerships]." Falconer
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