Estate of James R. Tobias, Deceased, V. Pauline Tobias, Executrix, and Verna P. Tobias, Surviving Spouse - Page 10




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                       As it cannot be determined what the                            
                  allocable share of such partnership income is                       
                  for any of the partners for any of the years,                       
                  all of the income has been allocated to each                        
                  partner, thus increasing your taxable income                        
                  a net $37,661, $25,208 and $18,089 [sic] for                        
                  taxable years ending December 31, 1990, 1991                        
                  and 1993, respectively.                                             

             Thus, the notice of deficiency issued to Darwin and his                  
             wife allocates to Darwin 50 percent of the ordinary income,              
             interest income, and long-term capital gain realized by the              
             partnership for the years 1990, 1991, and 1993.                          

             Discussion                                                               
                  In its motion for summary judgment, the estate takes                
             the position that respondent committed error by increasing               
             James' taxable income by 50 percent of the partnership's                 
             income and, thus, by treating him as subject to tax on all               
             of the partnership's income.  According to the estate, the               
             State court determined, consistent with Darwin's                         
             allegations, "that a 50-50 partnership did exist between                 
             James and Darwin with respect to the Lake Tobias Animal                  
             Farm."  The estate argues that, notwithstanding "Darwin's                
             eviction from active participation in the business", the                 
             partnership continued to exist during the years in issue                 
             for Federal tax purposes because there was no termination                
             pursuant to section 708.  Thus, according to the estate,                 
             partnership income for the years in issue must be allocated              





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