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the nonrecourse loans with new capital or profits from operations),
we concluded that a liquidation of IHCL under the comparative
liquidation test would not increase the partners’ capital accounts
sufficiently to eliminate THEI’s deficit account. Therefore,
because Mr. Manchester would continue to have the only positive
capital account on liquidation, we concluded that he alone would be
entitled to the liquidation proceeds. Thus, we sustained
respondent’s determination that Mr. Manchester was chargeable with
all of IHCL’s income for 1991 under the comparative liquidation
test.
Petitioner revised its argument on appeal to maintain that
there need not be a deemed sale of the hotel properties in order to
trigger the minimum gain chargebacks. On appeal, petitioner argued
that to generate such chargebacks, it would suffice that IHCL, a
pass-through beneficiary of the nonrecourse deductions, had
terminated its pass-through connection to the properties.
Respondent, having considered this revised argument, agreed. In
view of respondent’s concession as to the minimum gain chargebacks,
the Court of Appeals vacated our earlier decision and remanded the
case to us.
Following the Court of Appeals’ remand of this case, we
instructed the parties either to submit an agreed decision document
or to file written status reports advising how we should implement
the Court of Appeals’ mandate. The parties filed status reports
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