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objective is an issue of fact which must be resolved by
examining the surrounding facts and circumstances. In
making this determination, greater weight should be
given to objective facts than to a mere declaration of
the taxpayer's intent. The burden of proving the
requisite profit objective rests with the taxpayer.
[Simon v. Commissioner, supra at 501; citations
omitted.]
In these cases, the individual who in fact managed the
affairs of the partnerships was Fred, the principal of BBPA who
had structured the transactions. His role was consistent with
BBPA's undertakings that it would manage the partnerships.
The "surrounding facts and circumstances" of Fred's
operations reveal the absence of a profit objective. Fred
designed the partnerships not to produce a profit, but rather to
produce a loss. His objective was not economic gain, but rather
tax avoidance. Under Fred’s plan, the partners of the
partnerships would have to wait as long as 11 years before they
could expect to see a profit. Their only client--Machise--had
the option of waiting that long before paying the "compensation
fee". During those years, the partners' only recourse was to
wait.
Moreover, the transactions were so structured that their
waiting would be in vain. Fred eliminated any prospect for
partnership profits well before the partnerships had an
opportunity to collect them. Fred, acting on his own initiative,
executed termination agreements for all the partnerships except
W & A, which he eliminated as a "mutual mistake". These actions
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