- 3 -
Held: In view of the parties’ agreement, the
special allocation of 100 percent of IHCL’s income earned
after June 20, 1991, to THEI is in accordance with the
partners’ interests in IHCL and is therefore respected.
See sec. 704(b).
Kenneth W. Gideon, for petitioner.
Gretchen A. Kindel, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
JACOBS, Judge: This case is before us on remand from the
Court of Appeals for the Ninth Circuit. See Interhotel Co., Ltd.
v. Commissioner, 221 F.3d 1348 (9th Cir. 2000), vacating and
remanding without published opinion T.C. Memo. 1997-449. Torrey
Hotel Enterprises, Inc. (THEI), is a California corporation
organized and controlled by Douglas F. Manchester (Mr. Manchester).
THEI is the tax matters partner of Interhotel Company, Ltd. (IHCL),
a California limited partnership. Mr. Manchester is the other
partner in IHCL.
Respondent issued a notice of final partnership administrative
adjustment (FPAA) on April 11, 1995. In relevant part,1 respondent
1 In addition to the amounts at issue, respondent
determined that Interhotel Co., Ltd. (the partnership whose
earnings are at issue here), had ordinary income from its
business activities in the amount of $404,950, rather than
$355,745, as reported on its Form 1065, U.S. Partnership Return
of Income, for 1991. Respondent further determined that the
partnership was entitled to "Other Deductions, Professional Fees"
(continued...)
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