- 41 -41
interest in November, rather than March, of 1991). In addition,
by engaging in swap transactions, ABN restricted its ability to
earn "a rate of return in excess of the rate available on direct
investments in the securities which the Partnership plans to
purchase". Mr. den Baas testified that ABN did not want to
gamble on interest rates and that its swaps were designed to
prevent ABN from sharing in profits or losses from the LIBOR
notes--the ASA asset with the most profit potential.
We must look to the substance of the transactions rather
than the form. Hambuechen v. Commissioner, supra at 98; see
Gregory v. Helvering, 293 U.S. 465 (1935). When the formalities
are stripped away, ABN is in substance a lender. Accordingly, we
hold that Barber and Dominguito were not partners in ASA and that
the appropriate amount of gain relating to the sale of the PPNs
and loss relating to the sale of the LIBOR notes shall be
allocated between AlliedSignal and ASIC.
All contentions that have not been addressed are either
irrelevant, moot, or meritless.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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