-38-
IHCL Restated Agreement that liquidating distributions would go to
the partners with positive capital accounts. In contrast, the
partnership agreement in Vecchio provided that, upon sale of the
real property or liquidation, the limited partner was to receive
a return of its investment as well as payment of its negative
capital account balance before distributions could be made to the
other partners. We therein approved an allocation of income to
restore a negative capital account.
A number of other facts and circumstances underscore the
differences between Vecchio and the situation here. In Vecchio,
the limited partner invested $776,000 in the partnership. It did
so as an independent investor. In the instant case, THEI never
made an affirmative investment in IHCL. THEI, in fact, appears to
be no more than an accommodation entity, established and controlled
by its partner, Mr. Manchester, to serve his interests.
Additionally, in this case there is no specific cash, like the
$1,986,913 at issue in Vecchio, available to pay both THEI for its
negative capital account and Mr. Manchester for his positive
capital account. To the contrary, as demonstrated above, it would
appear impossible for IHCL to obtain a sufficient amount of money
because IHCL lacked the power to force the liquidation of the lower
tier partnerships.6
6 Petitioner has attached to its reply brief several
Schedules C, derived from exhibits admitted at trial. Petitioner
makes reference to these schedules in an attempt to demonstrate
(continued...)
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