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Beginning in about 1987, Century Industries made certain
investments that required additional capital contributions from
its partners. Some of these investments proved to be
unsuccessful. Ultimately, in 1988 or 1989, the partnership was
dissolved. Its affairs were wound up, and its remaining
investments with any value were distributed to the partners.
During the years at issue, Century Industries reported its
income on the calendar year and filed Forms 1065 U.S. Partnership
Returns, for each of its taxable years.
In notices of deficiency issued to the Kanters for 1981,
1982, 1983, 1984, and 1986, respondent determined that the
commitment fees paid to Century Industries constituted Kanter's
income for those years. Respondent issued a notice of final
partnership administrative adjustment (FPAA) to Century
Industries reallocating some of the partnership's 1986 income to
Kanter.51 No FPAA was issued to Century Industries for 1983 and
1984.
OPINION
The issue we decide is whether the commitment fees paid to
Century Industries are includable in Kanter's income for taxable
years 1981, 1982, 1983, 1984, and 1986. Respondent determined
51
A petition has been filed with this Court challenging the
FPAA with respect to Century Industries' 1986 tax year. Century
Indus. Ltd., Solomon A. Weisgal Revocable Trust, Solomon A.
Weisgal, Co-Trustee, Tax Matters Partner v. Commissioner, docket
No. 11559-90.
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