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section references are to the Internal Revenue Code for the year
in issue, and all Rule references are to the Tax Court Rules of
Practice and Procedure. After concessions, the sole issue for
decision is whether Booth Creek Investment, Inc., and State
Savings and Loan Association of Lubbock formed a valid
partnership for tax purposes. We conclude that they did.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. At
the time the petition was filed, the principal place of business
of 70 Acre Recognition Equipment Partnership was in Dallas,
Texas.
Booth Creek Investment, Inc. (BCI), was a corporation formed
under Texas law. Its primary activity was the purchase of real
estate for immediate resale. BCI participated in the booming
Texas real estate market of the early 1980's, and it executed
transactions quickly and frequently. BCI engaged in numerous
joint purchases of real estate, and written partnership
agreements were not always executed.
In 1982, BCI became interested in purchasing approximately
70 acres of real estate (the 70-Acre Tract) from Recognition
Equipment Inc. (REI). On December 23, 1982, BCI and REI entered
into an agreement entitled "CONTRACT OF SALE" whereby BCI agreed
to purchase, and REI agreed to sell, the 70-Acre Tract.
Consistent with its past investment strategy, BCI intended to
quickly develop and sell the property for substantial profit.
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