- 31 -31
Commissioner v. Culbertson, supra at 754 (Frankfurter, J.,
concurring).
IV. Partnership Formalities
Petitioner contends that ASA is a bona fide partnership
because the purported partners carefully followed partnership
formalities. Such formalities may have created a partnership
facade, but the conduct of AlliedSignal and ABN demonstrates that
the Bermuda Agreement, not the partnership agreement, governed
their affairs.
A. Income Allocations
The partnership agreement provided that ASA's income would
be allocated pursuant to a formula. The income allocations,
however, were merely an artifice to pay ABN's specified return.
AlliedSignal subtracted ABN's income allocations from the
specified return and made up the difference with direct payments.
On August 2, 1990, AlliedSignal made the first direct
payment to ABN--$4,400,000. The $4,400,000 was credited towards
ABN's specified return. On December 5, 1991, AlliedSignal paid
ABN an additional $1,631,250, which also was calculated to pay a
portion of such return. When the parties later determined that
ASA's income allocations, and AlliedSignal's direct payments, to
ABN had exceeded the specified return, AlliedSignal demanded and
received a $315,000 refund. In sum, ABN was entitled to receive
only its specified return--no more and no less.
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