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other partners. The partnership agreement states that the effect
of the withdrawal is to terminate the relationship of the
withdrawing partner as a partner and thereby eliminate the
withdrawing partner’s right to liquidate the partnership. The
withdrawing partner may transfer all or any part of his
partnership interest with or without consideration, but only
after providing the other partners the first option to purchase
his interest at fair market value, generally as determined by an
independent appraiser.
Upon dissolution of the partnership, proceeds from the
liquidation of partnership property, after satisfaction of
partnership debts, are to be applied to payment of credit
balances of the partners’ capital accounts.
Transfer of the Leased Land to the Partnership
On August 1, 1991–-one day before John and William had
executed the partnership agreement--petitioner and his wife
executed two deeds purporting to transfer the leased land to the
partnership.6 Each deed purported to transfer to the partnership
an undivided 50-percent interest in the leased land (for an
aggregate transfer of the entire interest in the leased land).
On August 30, 1991, the deeds conveying the leased land to the
partnership were recorded.
6 Again, as far as is revealed in the record, petitioner’s
wife owned no record title or interest in the leased land but
signed the deeds as a formality to eliminate any question as to
spousal benefits under Alabama law.
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Last modified: May 25, 2011