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by Alpha to Century under which loans these bonus payments were
made. Under the terms of both loans, Shelburne and Century, as
the debtors, were required not only to pay principal and interest
to Delta and Alpha, but Shelburne and Century were also required,
under certain conditions, to pay Delta and Alpha certain amounts
referred to as "bonus payments". These bonus payments were in
fact paid, and both Shelburne and Century treated the bonus
payments as interest and claimed deductions of such payments for
income tax purposes. In Durkin v. Commissioner, supra, this
Court held that the bonus payments did not constitute
compensation for the use of money and, therefore, were not
deductible as interest. We further found that the bonus payments
essentially were nothing more than a "mechanism" to divert funds
from Shelburne and Century to the partnerships, "thereby
increasing the income of the partnership and trust associated
with or established for the benefit of the members of the law
firm or their immediate families." Id. at 1400. Our holding
that the bonus payments were not deductible as interest was
affirmed by the Seventh Circuit. See Durkin v. Commissioner, 872
F.2d at 1278-1279.
The parties here do not dispute the factual findings or the
holding in Durkin v. Commissioner, supra. Nor do they deny that
the bonus payments constitute income to the recipient
partnerships. Respondent, however, on the basis of the language
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