- 16 - allocations of partnership items are to be made pursuant to the partnership agreements under section 704(a). Petitioner asserts that certain partners defaulted on the notes to Ranches. Petitioner contends that under the terms of the partnership agreement the interests of these partners have been terminated. Petitioner also contends that under the partnership agreement the defaulting partners are to be treated as having never assumed these obligations, and, therefore, they should not be allocated any share of the partnership liabilities under the agreement. Petitioner's contentions are not supported by the evidence in the record. Petitioner has not produced any evidence that any partners defaulted on the notes. Even if we were to find that partners defaulted on the notes, the original partnership agreement for Shorthorn Genetics Engineering 1984-5 does not support petitioner's argument. The partnership agreement contains a "look-back" provision, under which allocations of income, losses, and other items may be made to the partners' capital accounts at the end of the partnership's fifth year to adjust the prior allocations. For this partnership, these adjustments would not occur until sometime in 1989, after the taxable years at issue. We do not read this provision to provide that the partners never assumed the liability or to provide for retroactive allocations to prior years. In addition, the partnership agreement does not providePage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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