- 18 -
determined in accordance with the partners' interests in
the partnership pursuant to section 704(b)(1), on the
ground that the partnership agreement does not provide an
allocation of income. See sec. 704(b)(1). Respondent does
not argue that the allocation of income must be based upon
the partners' interests in the partnership pursuant to
section 704(b)(2), on the ground that the allocation
specified by the partnership agreement lacks substantial
economic effect. See sec. 704(b)(2).
Furthermore, respondent's position, which is based
upon all of the facts and circumstances of these cases, is
that James' interest in the partnership was 100 percent
during the years in issue, rather than 50 percent as
claimed by the estate. In our view, respondent's position
is not an affirmative defense, and we reject the estate's
position that the burden of proof in these cases is shifted
to respondent.
The second preliminary matter is whether the
partnership terminated in 1986, as suggested by Darwin and
his wife in their opposition to the estate's motion for
summary judgment. The estate contends that the partnership
did not terminate for Federal income tax purposes before
the years in issue.
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011