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As a preliminary matter, we consider respondent's contention
that petitioner's agent Coopers & Lybrand has admitted the
nonexistence of a valid partnership. In a letter to respondent,
Coopers & Lybrand stated that they agreed with respondent's
determination that BCI and State Savings had not formed a valid
partnership. This letter represents nothing more than an
accountant's conclusion after applying law to facts. We must
conduct our own analysis.
Representatives of BCI and State Savings testified that they
intended to form a partnership at the time of the transaction,
and we found them to be highly credible witnesses. The parties
agreed that BCI would contribute real estate expertise and manage
the property, while State Savings would make funds available for
the acquisition or development of the 70-Acre Tract. In
addition, the partnership filed contemporaneous information
returns and issued Schedules K-1.
Respondent contends that State Savings contributed nothing
of value to the partnership. Petitioner contends, however, that
the parties to the transaction considered State Savings'
commitment to make funds available a contribution of a valuable
service. The Supreme Court has indicated that the services or
capital contributed by a partner need not meet an objective
standard. See Commissioner v. Culbertson, supra at 742-743. The
Court further stated:
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Last modified: May 25, 2011