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The multimillion dollar license fees and lease royalties
that Boulder, Tech-1979, and Winfield agreed to pay were
excessive, did not reflect arm's-length debt obligations, and are
not to be recognized as legitimate obligations of the
partnerships. The license fees and lease royalties to which
Boulder, Tech-1979, and Winfield agreed, and the related debt
obligations, do not constitute legitimate, genuine debt
obligations and are to be disregarded.
On partnership information returns of Boulder, Tech-1979,
and Winfield, petitioners were identified as partners, and on
petitioners' respective individual Federal income tax returns for
the years in issue, they reported their distributive share of the
substantial claimed losses and credits relating to Boulder, Tech-
1979, and Winfield. By claiming these flowthrough partnership
losses, petitioners repeatedly represented to respondent the
existence of these partnerships and petitioners' status as
partners of the partnerships.
It was the general partners and the promoters of Boulder,
Tech-1979, and Winfield, not the limited partners, who controlled
the transactions and activities of the partnerships. Actions and
intent of the general partners with regard to Boulder, Tech-1979,
and Winfield, including the profit objective of the partnerships
or lack thereof, are attributable to petitioners. See Utah Code
Ann. secs. 48-1-9, -11 to -15, -17, -18; 48-2a-403 (1994).
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