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coownership of property does not create a partnership for Federal
income tax purposes, see Estate of Appleby v. Commissioner, 41
B.T.A. 18 (1940), affd. 123 F.2d 700 (2d Cir. 1941), coowners may
also be partners if they or their agents carry on the requisite
degree of business activities, Hahn v. Commissioner, 22 T.C. 212
(1954); Bentex Oil Corp. v. Commissioner, 20 T.C. 565 (1953);
Estate of Winkler v. Commissioner, T.C. Memo. 1997-4; Gabriel v.
Commissioner, supra; Marinos v. Commissioner, T.C. Memo. 1989-
492; Powell v. Commissioner, T.C. Memo. 1967-32. Section 1.761-
1(a), Income Tax Regs., provides as follows:
A joint undertaking merely to share expenses is not a
partnership. For example, if two or more persons
jointly construct a ditch merely to drain surface water
from their properties, they are not partners. Mere co-
ownership of property which is maintained, kept in
repair, and rented or leased does not constitute a
partnership. For example, if an individual owner, or
tenants in common, of farm property lease it to a
farmer for a cash rental or a share of the crops, they
do not necessarily create a partnership thereby.
Tenants in common, however, may be partners if they
actively carry on a trade, business, financial
operation, or venture and divide the profits thereof.
For example, a partnership exists if co-owners of an
apartment building lease space and in addition provide
services to the occupants either directly or through an
agent. * * * [Emphasis added.]
The arrangement between petitioner and the Pughs is a joint
venture carrying on a "business, financial operation, or venture"
and therefore falls within the literal statutory definition of
partnership. By the Commissioner's own regulation, the
arrangement is not taken out of this classification simply
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