17
3. Murphy's Percentage Ownership of Lone Star in 1989
Lone Star's Schedules K-1, Partner's Share of Income,
Credits, Deductions, Etc. (K-1), attached to the Forms 1065 show
the following partners and ownership percentages in Lone Star:
1984 1985 1986 1989
Sands 5 7 7.5 --
Heller 50 50 50 50
Murphy 15 15 9.32 50
Miller 15 15 15 --
Wiener 15 18.18 18.18 --
Total 100 105.18 100 100
Lone Star's 1988 Form 1065 indicates that Lone Star consisted of
five partners and that the partnership had no activity in 1988.
There are no K-1's attached to Lone Star's 1988 Form 1065. If
there was a 1987 Form 1065, it is not part of the record.
Murphy argues that he did not own 50 percent of Lone Star in
1989 and that amounts received by Lone Star in 1989 should be
allocated to all five partners according to the 1986 ownership
percentages. We agree. By 1989, Lone Star was settling its
disputes with Eltech, Electro, and/or Micro-Bio. We find that
the ownership interests for the taxable year 1989 are the same as
the ownership interests shown on Lone Star's 1986 Form 1065.
Murphy intended the 1989 K-1's to reflect that he and Heller were
the only partners with any active involvement in Lone Star during
1989, and their involvement stemmed from the ongoing dispute with
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