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have the necessary information to provide specific amounts when
he prepared BBP’s tax returns. However, the fact that the
partnership returns failed to report specific amounts of assets
and liabilities does not mean that Russell did not have a
positive basis in his partnership interest. It is evident that
the partnership returns are incorrect, and respondent cannot rely
upon them to meet his burden.
At trial, Russell introduced two loan statements addressed
to BBP. The first statement, from FCS of NW North Dakota,
reflects an operating loan with a principal balance of
$678,860.67 as of January 1, 1994, and $649,537.49 as of December
31, 1994. The second statement, from the First Bank Minot,
reflects a loan with a balance of $157,803.26 as of March 31,
1994. Russell claims that these loans reflect a basis of at
least one-half of the combined loan balances, or $403,670,
because he obligated himself for the partnership debt.26 Russell
claims that he had additional basis as a result of certain
adjustments contained in the notice of deficiency. Russell also
contends that Melvin withdrew more money from BBP over the years
25(...continued)
Melvin’s death, the assets of BBP “consisted of cash, marketable
securities, notes receivable, oil and gas properties, office
furniture and fixtures, farm inventory, seed, buildings and
equipment having a fair market value of $1,463,019.”
26At trial, Russell and Mr. Feldmann testified that these
loans were fully paid in 1998, one-half by Russell and one-half
by a limited partnership formed for Melvin’s children.
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