Three couples formed a partnership to own a shopping center. The IRS found deficiencies in their tax filings and the case involves determining whether management fees and interest earned by the partners and partnerships are deductible as business expenses and whether guaranteed payments apply. The court analyzed whether these payments should be included in the partners' income and whether section 267 applies to partnerships. Relevant facts include limited partners not participating in the conduct or control of the business, the partnerships intending for management fees and interest to be expenses, and partners including their distributive share of profits or losses in their income.
Pratt v. Commissioner (1975)
United States Tax Court
64 T.C. 203
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