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Petitioner and Burnett agreed to form TGR II on May 14,
1993. They signed the Warfield Drive property agreement on May
17, 1993, which memorialized their May 14, 1993, agreement. The
terms of the Warfield Drive property agreement are essentially
the same as those in the Babcock Road property agreement, except
for the purpose for acquiring the real property. Exhibits A and
B to the Warfield Drive property agreement state that petitioner
and Burnett formed TGR II to acquire the Warfield Drive property.
The Warfield Drive property agreement stated that petitioner and
Burnett intended to collect rental income from that property for
many years and to hold it to appreciate in value. TGR II bought
and held the Warfield Drive property to carry on a business.
Petitioner and Burnett adopted the TGR name, acquired the
property under that name, and held out TGR II as a partnership.
Petitioners reported active partnership income and loss from TGR
II for 1993, 1994, 1996, and 1997. Petitioner and Burnett
intended to and did operate a real estate rental business
together.
Petitioners contend that TGR II did not buy the Warfield
Drive property because petitioner and Burnett signed the joint
venture agreement after they bought the property. We disagree.
The written agreement that petitioner signed on May 17, 1993,
states that Burnett and petitioner agreed on May 14, 1993, to
establish TGR II to buy and hold rental real property for 3 to 5
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