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The payment of the specified return violated the partnership
agreement provision that "no interest" was to be paid on capital
contributions. The precise amount of this return could not be
determined until AlliedSignal and ABN knew ABN's actual interest
rate on the funds it advanced and how long such funds were held
in the partnership. Petitioner concedes that the direct payments
to ABN depended on the amount of time ABN's funds were in ASA,
yet it asks this Court to conclude that the partnership provision
barring interest on capital contributions was adhered to. We
decline to do so. Cf. O'Hare v. Commissioner, 641 F.2d 83, 86
(2d Cir. 1981), (stating "It is hardly likely that a true owner
or joint venturer would agree to an arrangement whereby his
profit depended upon the timing of the sale rather than the
amount of the proceeds of the sale. Such a payment mechanism
clearly suggests a fee for the use of credit * * *"), affg. T.C.
Memo. 1980-34. The direct payments, and the income allocations,
to ABN were interest. Cf. Deputy v. duPont, 308 U.S. 488, 498
(1940) (defining "interest" as compensation for the use or
forbearance of money).
Citing Hunt v. Commissioner, T.C. Memo. 1990-248, petitioner
contends that even if ABN was entitled to a guaranteed return,
such return "is not inconsistent with partnership treatment".
Hunt, however, is distinguishable. First, in Hunt, the
partnership agreement provided for the guaranteed return. ABN's
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