T.C. Memo. 1997-449
UNITED STATES TAX COURT
INTERHOTEL COMPANY, LTD., TORREY HOTEL ENTERPRISES, INC., TAX
MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13017-95. Filed September 30, 1997.
M and THEI were partners in IHCL. IHCL was formed
in 1981 to hold interests in both PGL and PLH, which were
partnerships formed for the purpose of constructing,
owning, and managing separate hotel towers of a resort
complex located adjacent to the then-unbuilt San Diego
Convention Center. IHCL's partnership agreement provided
that upon liquidation, the liquidation proceeds would be
distributed only to those partners having positive
capital accounts. IHCL's partnership agreement did not
require the partners to restore any deficits in their
capital accounts upon liquidation of the partnership.
In 1985, D agreed to invest $19.8 million in IHCL in
exchange for a 15-percent interest in IHCL, together with
a special allocation of 99 percent of IHCL's income and
losses. Upon D's entry as a partner in IHCL, M withdrew
as a partner of IHCL, and THEI's interest in IHCL was
reduced.
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