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actually owned the ranch or whether State law applies in deciding
that issue.
On these facts, we hold that the duty of consistency
applies, and, therefore, petitioners are estopped from claiming
that the ranch was not partnership property at the time of its
sale in 1988.
The Alleged Transfer of the Partnership Interest
to the P.C. in 1988
Petitioners’ second argument assumes that the ranch was
partnership property and focuses on whether petitioner was the
owner of his partnership interest for Federal tax purposes when
the ranch was sold in October 1988. Petitioner claims that he
transferred his partnership interest to his professional
corporation in August 1988 and that his professional corporation
was required to report the distributive share of income reflected
on the Schedule K-1 issued to petitioner for 1988. Petitioners
cite Evans v. Commissioner, 54 T.C. 40, 49 (1970), affd. 447 F.2d
547 (7th Cir. 1971), and Baker v. Commissioner, T.C. Memo. 1991-
331, in support of their position. Their reliance on these cases
is misplaced.
In Evans, the taxpayer transferred his partnership interest
to a corporation that he formed to operate his own business. The
transfer was pursuant to a detailed written assignment. The
corporation listed the partnership interest as an asset of the
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