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purchasing and rezoning unimproved land, which it then sold in
subdivided tracts.
The partners agreed to share profits and losses equally,
except for gain or loss from the sale of property contributed to
the partnership by a partner. The partnership agreement provided
that gain or loss from the sale of property contributed to the
partnership by either of the partners was to be allocated to the
contributing partner to take account of the variation between the
basis of the property to the partnership and its fair market
value at the time of contribution. Because of this provision,
the partners often recognized disparate amounts of gain upon
disposition of the contributed properties.
Because both of the partners had other business interests,
they agreed that neither partner would work at the partnership
activities on a full-time basis; rather, they agreed that the
partnership would be an investment type of arrangement.
Accordingly, the partners would spend a week to a month working
on partnership business activities, and then be inactive for 2 or
3 months.
Due to unfavorable business conditions in the early 1990's,
the partnership curtailed its business activities by purchasing
fewer properties. In 1993, in an effort to further downsize its
operation, the partnership discontinued the services of its full-
time bookkeeper, and by agreement, Segrest assumed those
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Last modified: May 25, 2011