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received was equal to 1 percent of the capital gain income a
partnership realized from its sale of sheep each year. He also
added that while these payment made to him were credited to his
capital account with that partnership, he was not allowed to
withdraw the funds. He stated that he was required to leave the
funds in the partnership because it had been agreed that this was
the means by which he would establish a capital account in a
partnership.
Petitioners have failed to establish that the alleged
payments each of these partnerships made to Mr. Hoyt are
deductible under section 162(a) by that partnership. Petitioners
provided scant information concerning (1) the nature of the
services Mr. Hoyt performed for that partnership and (2) whether
the payments represented reasonable compensation for such
services Mr. Hoyt rendered. Thus we hold that RCR #4, RCR #6,
and OGT 90 are not entitled to the deductions for guaranteed
payments they claimed for the years in issue.36 See Durkin v.
Commissioner, supra at 1388-1389.
Issue 5. IRA Deductions
RCR #4 and RCR #6 each claimed deductions for some of the
years in issue for alleged Individual Retirement Account (IRA)
contributions they made for certain of their partners.
36It is thus unnecessary for the Court to decide whether,
for purposes of sec. 707(c), the payments Mr. Hoyt received were
determined without regard to partnership income, an issue upon
which the parties disagree.
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