Bill McDonald - Page 20

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          agreement, and all of their Schedules K-1 reflect that their                
          partnership interests were 50 percent each.  Three other M&M                
          returns reflect conflicting and varying divisions of profits by             
          Maynard and McDonald.  Two of them divide M&M’s profit about two-           
          thirds for McDonald and one-third for Maynard.  The third return            
          reflects a division of profit of about 85 percent for Maynard and           
          15 percent for McDonald.  This erratic pattern does not lend much           
          support for petitioners’ argument.  Respondent contends that                
          petitioners manipulated their income between them depending on              
          the circumstances.  For example, respondent contends that a large           
          portion of the income for 1988 and 1989 was shifted to Maynard              
          because he had claimed large carryover losses from prior years.             
               Section 702(a) requires that a partner account for her                 
          distributive share of partnership income.  In the absence of a              
          partnership agreement, a partner’s distributive share is to be              
          determined in accord with the partner’s interest in the                     
          partnership.  Sec. 704(b).  Petitioners argued that their oral              
          partnership agreement was that McDonald’s income was not to                 
          exceed $6,000.  In their testimony, however, petitioners admitted           
          that no record of work completed or other measure of their                  
          efforts was maintained.  Further, petitioners testified that                
          Maynard would estimate an amount for McDonald at the end of each            
               Respondent, in the notices of deficiency, determined                   
          $214,393 of partnership income, attributing $79,661 to McDonald             
          and $134,732 to Maynard.  That determination hypothesizes that              

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