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partners in the partnership. The partnership was formed to
acquire 38 lots for immediate sale.
On December 30, 1990, the Kiddies-CKE 38 Joint Venture
acquired equitable title to 53 additional lots and changed its
name to the Kiddies 91 Joint Venture4 (Kiddies 38/91
partnership).5
In February of 1989, petitioner formed the Edward Tietig/
Mark Tietig 100 Lot Joint Venture (100-lot partnership).6 The
partnership’s principal business activity was land resales.
I. Issue 1. Payments for Use of Collateral
A. Background
In 1982, petitioner had a series of loans that were coming
due that were cross-collateralized by various properties.
Petitioner needed to either pay off or refinance the loans but
found that he could do neither. Petitioner did not have
sufficient liquid funds to pay off the loans, and no institution
would lend him the money. As a result, petitioner sought the
4The name changed because of the increased number of lots
held by the joint venture (38 + 53 = 91).
5The association was labeled a joint venture on its Form
1065. For Federal income tax purposes, joint ventures are
partnerships. Sec. 7701(a)(2). Thus, throughout this opinion we
refer to it as a partnership.
6The association was labeled a joint venture on its Form
1065. For Federal income tax purposes, joint ventures are
partnerships. Sec. 7701(a)(2). Thus, throughout this opinion we
refer to it as a partnership.
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