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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
year.
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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