Hugh and Linda Janow - Page 9

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            means that such guaranteed payment must be excluded.  We                                      
                  We find petitioners' arguments to be an incorrect reading of                            
            the Closing Agreement.  Form 906 binds the parties only to                                    
            specific matters agreed upon.  Zaentz v. Commissioner, supra at                               
            761.  As we read the Closing Agreement, the parties agreed to                                 
            settle with respect to petitioners' taxable income, gains, and                                
            losses from their interest in Federal.  Nowhere in the Closing                                
            Agreement is there a provision excluding the $20,000 guaranteed                               
            payment.  In fact, the parties stipulated that the treatment to                               
            be accorded to guaranteed payments was not expressly discussed by                             
            either party during the settlement negotiations.  We reiterate                                
            what we stated in Janow I.  The definition of a "guaranteed                                   
            payment" to a partner supports this interpretation of the Closing                             
            Agreement.  A guaranteed payment is a payment made by a                                       
            partnership to a partner for services or for the use of capital                               
            and is considered as made to one who is not a partner, to the                                 
            extent such payment is determined without regard to the income of                             
            the partnership.  Sec. 707(c); sec. 1.707-1(c), Income Tax Regs.                              
            For the purposes of sections 61(a) and 162(a), guaranteed                                     
            payments are not considered part of a partner's distributive                                  
            share of partnership income.  Pursuant to section 707, a partner                              
            shall include in his income for a taxable year guaranteed                                     
            payments which are made to him in a partnership taxable year                                  

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