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the balance in that partner’s capital account. Article 14
provides that the partnership will continue for 50 years, unless
all partners consent to a dissolution. Under the partnership
agreement, petitioner, as trustee of the management trust, could
sell any asset or part of any asset at any time.
The fair market values (before any discounts) of partnership
assets on December 28, 1994, were as follows:
Freestone County Ranch (with mineral rights) $182,251
Residential property (6219 Dilbeck) 166,880
Residential property (14827 Chancey) 145,070
USAA municipal bond fund 553,653
Dreyfus municipal bond fund 510,239
Treasury notes 461,345
Insurance policies 51,885
Cash 10,000
Total 2,081,323
Petitioners transferred the bond funds and Treasury notes to
brokerage accounts in the name of the partnership. The
partnership had no liabilities and no assets other than those
listed above. All of these assets were petitioners’ community
property before being transferred to the partnership.
C. Operation of the Management Trust and Partnership
1. Operation of the Management Trust
Petitioner has been the only trustee of the management
trust. Petitioner decides which assets to buy and sell, pays all
partnership expenses, handles and keeps records of all
partnership transactions, and explains the transactions to the
partnership's accountants. The management trust has never had a
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Last modified: May 25, 2011