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time that they filed their petition. The pertinent facts are
summarized below.
George Coward (petitioner) was an investor in Washoe Ranches
#7 LTD. (the partnership), a limited partnership formed to engage
in the business of breeding cattle. On December 20, 1978, Walter
J. Hoyt III, as general partner, executed the Certificate and
Articles of Limited Partnership for the partnership. Mr. Hoyt
signed the limited partnership agreement on behalf of each of the
limited partners including petitioner. The agreement stated that
it was executed on January 1, 1978. The agreement was filed with
the county of Washoe, Nevada.
The partnership agreement provided that each limited partner
would contribute cash to partnership capital in the amount set
forth after his name. No amount was shown on the agreement after
any limited partner's name. On December 28, 1978, petitioner
made his first and only capital contribution to the partnership
for the taxable year 1978 in the amount of $500. The partnership
records show that capital contributions to the partnership from
the six limited partners totaled $2,750 for that taxable year,
and all of the contributions were made on December 28, 1978. On
March 18, 1979, petitioner signed an agreement to purchase 12
units of the partnership for $30,000 as his interest.
Under the terms of the partnership agreement, the general
partner was not to contribute capital to the partnership. The
general partner was responsible for managing the partnership. In
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