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partner's ownership, profits, and losses were reflected on
Schedules K-1.5
On petitioners' 1990 income tax return, the operating losses
and loss on the sale of petitioner's interest in the venture were
clearly and explicitly reported as being from a partnership named
Bass Associates. Indeed, the sale of petitioner's interest to
Mr. Allingham was pursuant to a written document that explicitly
states that it was a sale of a partnership interest. Both
petitioner and Mr. Allingham signed this document on December 30,
1990.
It was not until petitioners' loss deduction was challenged
that petitioner disclaimed the existence of the partnership. Mr.
Allingham, who purchased petitioner's partnership interest
pursuant to a written agreement and who prepared the partnership
returns and petitioners' 1990 return, testified at trial that he
never intended Bass Associates to be a partnership. Neither
petitioner nor the other two partners testified. In light of Mr.
Allingham's prior actions and representations that Bass
Associates was a partnership, we cannot accept the explanation
offered by Mr. Allingham at trial.
We find that the $65,316 loss that petitioner sustained in
1990 resulted from the sale of his partnership interest in Bass
5These percentages were not reflected in the note signed by
the partners, wherein they each appear to have become jointly and
severally liable to Citytrust. The quitclaim deed to the
property is not in evidence.
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