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partnership. All four petitioners are personally liable for the
Bitker partnership’s debts.
Mr. Mostoller prepared and maintained a depreciation schedule
showing the historical cost of equipment, less depreciation taken
each year. He verified loan balances by calling the Farm Credit
Service. Mr. Mostoller calculated the Bitker partnership’s capital
by subtracting the loan balances from the total adjusted cost bases
of partnership assets (cost basis less depreciation). Mr.
Mostoller determined the partners’ capital contributions and
distributions by taking each partner’s beginning capital account,
adding thereto (or subtracting therefrom) the partner’s
distributive share of the Bitker partnership’s net income (or net
loss) for the year, and subtracting the partner’s ending capital
account--the difference being the amount of the distribution to, or
the amount of the contribution by, the partner to the Bitker
partnership for the particular year.
On Schedules K-1 attached to Forms 1065 filed by the Bitker
partnership for years prior to 1991, the amounts for “Partner’s
share of liabilities” and “Analysis of partner’s capital account”
were left blank. Schedules K-1 attached to the Forms 1065 filed by
the Bitker partnership for years 1991-97 (the 1991-97 Schedules K-
1) reflect that each petitioner husband owned 30 percent of its
capital and that each was entitled to 30 percent of its profits and
losses. The 1991-97 Schedules K-1 reflect that each petitioner
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Last modified: May 25, 2011