- 6 -
Kahn v. Commissioner, supra at 1189; Luna v. Commissioner,
42 T.C. 1067, 1077-1078 (1964); Hall v. Commissioner, T.C. Memo.
1993-198.
We agree with respondent in this case that NTG should be
treated as a partnership for Federal income tax purposes. By
virtue of NTG's letterhead and advertisements and by filing a
New York State certificate of partnership, petitioner and
Mr. Troue represented to the public that NTG constituted a
partnership. Although a formal written partnership agreement
between petitioner and Mr. Troue did not exist, petitioner and
Mr. Troue did have an understanding that income and expenses of
NTG would be shared. Petitioner and Mr. Troue both made
significant financial contributions to NTG. Both petitioner and
Mr. Troue had control over NTG's bank account.
Further, on the 1989 Form 941 and on their individual
Federal income tax returns, petitioner and Mr. Troue represented
that NTG constituted a partnership.
Based on the facts before us, we conclude that petitioner
and Mr. Troue intended to and did form a law partnership and that
NTG is to be treated as a partnership for Federal income tax
purposes. See Barron v. Commissioner, T.C. Memo. 1992-598. If
the claimed $35,000 loss has been substantiated and is to be
allowed, it will only qualify as a partnership loss.
Petitioner's alternative claim for a Schedule C business expense
is disallowed.
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