George A. and Marysue Coward - Page 10

            The burden of proof is not altered by submission of the case                                 
            fully stipulated under Rule 122.  Rule 122(b).                                               
                  Determining when a partnership is formed is a question of                              
            fact.  Sparks v. Commissioner, 87 T.C. 1279, 1282 (1986).  For                               
            Federal income tax purposes, a partnership comes into existence                              
            "`when the parties to a venture join together capital or services                            
            with the intent of conducting presently an enterprise or                                     
            business.'"  Antonides v. Commissioner, 91 T.C. 686, 698 (1988),                             
            (quoting Sparks v. Commissioner, supra at 1282), affd. 893 F.2d                              
            656 (4th Cir. 1990).  A partnership is deemed to be formed as of                             
            the date that the first parties to the venture acquired their                                
            respective capital interests in such partnership.  Sparks v.                                 
            Commissioner, supra at 1283.  To qualify as a partner, each party                            
            must contribute capital or services to the partnership.  Id.                                 
                  In determining a partner's investment tax basis with respect                           
            to partnership property, the regulations provide:  "each partner                             
            shall take into account separately, * * *, his share of the basis                            
            of partnership new section 38 property and his share of the cost                             
            of partnership used section 38 property placed in service by the                             
            partnership during such partnership taxable year."  Sec. 1.46-                               
            3(f)(1), Income Tax Regs.  As a general rule "Each partner's                                 
            share of the basis (or cost) of any section 38 property shall be                             
            determined in accordance with the ratio in which the partners                                
            divide the general profits of the partnership".  Sec. 1.46-                                  
            3(f)(2)(i), Income Tax Regs.                                                                 

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