Michael H. Gulley and Paula M. Gulley - Page 12




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          and had no assets after the Encino Park foreclosure,2 and had no               
          partners after Schlesinger and petitioner filed their petitions                
          in bankruptcy.  We disagree.                                                   
               A partnership terminates for tax purposes when no part of                 
          any business, financial operation, or venture of the partnership               
          is carried on by any of its partners in a partnership.  See sec.               
          708(b)(1)(A).3  For purposes of section 708(b)(1)(A), the date of              
          termination is the date on which the winding up of a                           
          partnership’s affairs is completed.  See sec. 1.708-                           
          1(b)(1)(iii)(a), Income Tax Regs.  Winding up is not defined in                
          the Code or regulations.                                                       
               Petitioners point out that the GSD partnership agreement                  
          states that GSD terminates upon the bankruptcy of the general                  
          partner.  See supra note 1.  Petitioners also point out that,                  
          under Texas law, a person ceases to be a general partner in a                  



               2  GSD’s partnership returns showed assets of $1,474 for                  
          1988, and $1 for 1989, 1990, and 1991.                                         
               3  Sec. 708(b) provides:                                                  
               SEC. 708(b).  Termination.–-(1) General rule.  For purposes               
          of subsection (a), a partnership shall be considered as                        
          terminated only if–-                                                           
                    (A) no part of any business, financial operation, or                 
               venture of the partnership continues to be carried on by any              
               of its partners in a partnership, or                                      
                    (B) within a 12-month period there is a sale or                      
               exchange of 50 percent or more of the total interest in                   
               partnership capital and profits.                                          





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