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property had been almost completely depreciated at decedent's
death. Moreover, petitioner itself claims that decedent’s farm
partnership interest was worthless at that time.
Petitioner argues that any excess contributions of capital
made by decedent were offset by contributions of services made by
the children. According to petitioner, as a result of these
contributions of services, the family farm partnership qualifies
as an ordinary business transaction under the long history of
favorable case law dealing with the formation of family
partnerships.
In making this argument, petitioner relies heavily on our
decision in Fischer v. Commissioner, 8 T.C. 732 (1947). In
Fischer, we held that the formation (by a father and two sons) of
a partnership to carry on an established business owned by the
father did not result in taxable gifts from father to sons, where
the father contributed more capital than the sons, but the sons
planned to contribute more future services than the father.
Petitioner argues that the facts of Fischer are "remarkably
similar" to the facts of this case. In response, we note that in
Fischer, unlike the case at hand: (1) There was a written
partnership agreement; (2) partnership tax returns were filed;
(3) the partners reported partnership earnings on their
individual income tax returns; and (4) for these reasons (among
others) we found that a valid, bona fide partnership existed.
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