Shorthorn Genetic Engineering 1982-2, Ltd., Shorthorn Genetic Engineering 1982-4, Ltd., Shorthorn Genetic Engineering 1982-5, Ltd., Walter J. Hoyt III, Tax Matters Partner, et al. - Page 16

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          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 provide             

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