- 12 -
% of P's
Interest
Name Basis Foreclosed On Loss
Dime Box No. II $1,056.32 100% $1,056.32
Dime Box No. III (Pet.) 3,730.90 93.75 3,497.72
Dime Box No. III (M & A) 873.26 50 436.63
CAG Farmout 2,797.60 75 2,098.20
66 Farmout (Pet.) 873.68 100 873.68
66 Farmout (M & A) 581.79 100 581.79
Character of Loss
Finally, we must decide the character of the loss. Gain or
loss on the sale or exchange of a partnership interest is capital
gain, except in certain circumstances involving unrealized
receivables and inventory. Secs. 741, 751. Respondent concedes
that the foreclosure of each partnership interest was a sale or
exchange under which loss was realized and hence recognized.
6(...continued)
interest held in the name of M & A Interest, and the Dime Box No.
III interest held in the name of M & A Interest. According to
the Schedules K-1, petitioner owned the same percentage of each
of these three partnerships at the end of 1987 as he did at the
beginning, which suggests that no foreclosures occurred with
respect to these partnership interests during the year. However,
the parties agree, and we have found, that foreclosures occurred
during 1987 with respect to these interests. The Schedules K-1
are, in this respect, inconsistent. The Schedules K-1
notwithstanding, respondent clearly concedes, and we have found,
that petitioner suffered losses premised on the foreclosure of
the following: His entire interest in 66 Farmout held in his
name, his entire interest in 66 Farmout held in the name of M & A
Interest, and half of his interest in Dime Box No. III held in
the name of M & A Interest.
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