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In short, respondent fails to consider the highly unusual
facts and circumstances of this case. Neither party was required
to contribute cash for the purchase of the 70-Acre Tract. The
gain from resale of part of the 70-Acre Tract was realized on the
same day it was purchased. Documents were executed in the name
of only one partner for the sake of administrative convenience.
State Savings was purposefully recognized as a partner by BCI in
consideration of the performance of a valuable service (i.e.,
making credit available for the transaction).
Accordingly, we hold that BCI and State Savings formed a
partnership valid for tax purposes. As a result, the partnership
properly allocated 50 percent of the gain realized from the sale
of the 25-Acre Tract to State Savings.
We have considered all other arguments made by petitioner
and respondent and found them to be either irrelevant or without
merit.
To reflect the foregoing,
Decision will be entered
for petitioner.
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Last modified: May 25, 2011