Bill McDonald - Page 21

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          McDonald and Maynard split partnership profits by a ratio of                
          approximately 37 to 63 percent.                                             
               More in line with the statutory notices, Agent Pease’s                 
          analysis reflected that the 1989 return preparation ratio between           
          Maynard and McDonald was about 60 percent to 40 percent,                    
          respectively.  McDonald, however was responsible for the                    
          administrative duties, including billing, banking, record                   
          keeping, etc.  Other than their self-serving testimony,                     
          petitioners have not produced any evidence of a partnership                 
          agreement.  In addition, petitioners’ financial transactions,               
          which included shifting relatively large amounts of cash between            
          petitioners and their families, combined with petitioners'                  
          indiscriminate use of reported and unreported bank deposits for             
          personal purposes, and their failure to distinguish between                 
          interests in the partnership and corporate entities, severely               
          weaken petitioners’ credibility regarding their alleged                     
          partnership arrangements.                                                   
               Petitioners’ position that Maynard was entitled to the                 
          partnership profits in excess of $6,000 defies belief and is                
          wholly unsupported by the evidence in the record.  On the other             
          hand, respondent, although determining in the notices of                    
          deficiency a ratio of about 37 percent to 63 percent for McDonald           
          and Maynard, respectively, argues on brief that the partnership             
          income should be split 50 percent-50 percent, as reflected on the           
          Schedules K-1.  We do not find the 50 percent-50 percent reported           
          position of petitioners to be any more persuasive or less self-             

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Last modified: May 25, 2011