- 15 -
Petitioner attempts to distinguish Drake because Drake
invested in oil wells located in the Illinois Basin. Barton,
however, which was involved in our test case, Krause v.
Commissioner, 99 T.C. 132 (1992), also invested in oil wells
located in the Illinois Basin. Drake's activity in the Illinois
Basin and elsewhere in no way justifies the EOR license fees to
which Drake agreed.
Drake realized income from oil and gas activities in the
Illinois Basin equivalent to less than 1 percent of the license
fees accrued (without regard to interest). Drake's activities in
other oil and gas fields yielded even less income.
In 1983, the best year for the Illinois Basin joint venture
in which Drake participated with other partnerships, revenue from
oil and gas sales totaled $3,243,148. After expenses, Drake was
allocated $309,776 of these sales proceeds, less than 2 percent
of the license fees Drake owed.
Petitioner alleges that Coppage, Drake’s individual managing
general partner, was not among the original creators of this tax
shelter partnership and that he was not tainted by many of the
non-arm’s-length features of the partnerships. To the contrary,
the evidence is clear that Coppage entered into the license
agreements on behalf of Drake without negotiating the price.
There is no credible evidence that Coppage relied on anyone
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011