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Respondent first stresses the circular nature of the
payments--the partnership's debt payments to Hambrose were
exactly offset by the rental payments it received from
Charterhouse. This circularity is set forth in the stipulation
of facts as well as the POM. As we have previously held,
circular payments do not per se constitute “other similar
arrangements” for purposes of section 465(b)(4). Krause v.
Commissioner, 92 T.C. 1003, 1024 (1989). Nevertheless, they are
a factor to be considered. Levien v. Commissioner, supra at 126.
Not only were the debt and rental payments matching in
amount and timing, but the flow of payments was circular. It
would thus appear to make no difference whether the parties made
the payments or not, so long as each of the parties in the circle
did the same thing. The circularity of the payments, when
combined with the common ownership of Charterhouse and Hambrose,
provides little economic incentive for Hambrose to pursue the
limited partners for their share of the debt in the event of a
default.
Respondent also contends that the deferral provisions
operated to protect petitioner against loss. The sale or re-
leasing of the equipment at the end of the transactions, which
could have provided funds to satisfy deferred liabilities, was
viewed as a significant source of return on investment. It is
clear that debt obligations payable in the future are included in
the amount for which a partner is considered personally liable
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