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partnership upon petitioner's retirement. See secs. 705, 752(b);
Lynch v. Commissioner, supra; Abraham v. Commissioner, supra.
Thus, we hold that petitioner is not entitled to a $121,500
loss deduction due to his withdrawal from the Heidelberg and
Woodliff partnership because he failed to prove that he had any
basis in the partnership.
However, assuming arguendo that petitioner did have basis in
the Heidelberg & Woodliff partnership when he left the law firm,
petitioner has not shown that he is entitled to a loss deduction in
1991.
Section 1.736-1(a)(1)(ii), Income Tax Regs., provides:
A partner retires when he ceases to be a partner under
local law. However, for purposes of subchapter K,
chapter 1 of the Code, a retired partner or a deceased
partner's successor will be treated as a partner until
his interest in the partnership has been completely
liquidated.
A retiring partner's entire interest in a partnership is terminated
through the liquidation of the partner's interest by means of a
distribution or series of distributions to the partner by the
partnership. Secs. 736(b), 761(d); sec. 1.761-1(d), Income Tax
Regs. The liquidation is complete upon the final distribution to
the partner. Sec. 1.761-1(d), Income Tax Regs.
Here, the parties stipulated that petitioner left the firm at
the end of 1990; indeed, petitioner testified that he was not a
partner after December 31, 1990. Petitioner introduced no evidence
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