- 33 -33
specified return, however, was not provided in, and was contrary
to, AlliedSignal's and ABN's partnership agreement. Second, in
Hunt, the partner receiving the guaranteed return was also
eligible to receive partnership profits in excess of such
partner's guaranteed return. ABN, however, was only entitled to
its specified return and nothing more. Cf. O'Hare v.
Commissioner, supra at 87 (stating that the taxpayer's failure
to share in any of the profits above his prearranged fee
militated against a finding that he was a joint venturer).
Therefore, Hunt v. Commissioner, supra, is inapplicable.
B. Loss Allocations
The partnership agreement provided that losses would be
shared on a pro rata basis. ABN, however, did not intend to, nor
did it actually, share in ASA's losses.
1. Loss on PPN Sale
Prior to meeting AlliedSignal's representatives, Mr. den
Baas told other ABN officials that ABN would not bear any loss
relating to the PPN sale. The Bermuda Agreement was consistent
with this representation. ABN's April 11, 1990, internal
memorandum further confirms this agreement. It states: "Any
possible loss (for whatever reason) on the sale of the medium
term notes will be fully borne by Allied Signal." The parties
ensured that AlliedSignal would bear such loss by embedding the
cost of the PPN sale in the value of the LIBOR notes (i.e., the
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