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W&R by the end of 1994. Each severance agreement required W&R to
repay to the withdrawing partner the capital contributed by the
withdrawing partner net of capital loans. The capital loans of
the withdrawing partner were then paid with the balance of the
capital contributed, and in Handler’s case W&R obtained Handler’s
release from the bank that lent Handler the money. Both
severance agreements contained mutual releases from any further
liabilities and claims for services including a release by the
withdrawing partner of any right to claim assets on liquidation.
Neither withdrawing partner was entitled to income from the
partnership for any year after 1994 because each released W&R
from any further claims. The accountings prepared by W&R
establish that all moneys due from W&R to Parson and Handler had
been completely paid by the end of 1994. As a result, no income
was allocated to Parson or Handler in 1995.
Sargent was not an equity partner but was still owed
$27,000, as of October 31, 1993, for capital he had contributed
to W&R. According to the capital accounts calculated by W&R, all
moneys due him were paid in 1994. He had no right to income as a
contract partner and was not listed in the partnership agreement
to share any distributions upon liquidation.
Tilton’s and Hahn’s severance agreements are not in the
record. We infer from the stipulations and documents before us
that they were treated in the same manner as Parson’s and
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