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than he did and that this supports his arguments that Russell had
sufficient basis in BBP in 1994 to avoid being taxed on the
amounts distributed in excess of his distributive share.
Finally, Russell relies on Mr. Feldmann’s testimony that he had
withdrawn considerably less money from BBP than Melvin had and
that Russell would have had a positive basis after receiving the
grain sales proceeds in 1994.
Respondent argues that Russell has not shown that the basis
imputed to his partnership interest from the liabilities still
existed in 1994 or had not been used up by prior distributions.
Respondent claims that intervening events likely affected
Russell’s basis in BBP and that the existence of the loans does
not establish that Russell had any basis in BBP. Respondent
contends that as a result of partnership adjustments proposed to
Russell and settled for 1993 and 1994, Russell’s basis in the
partnership would have increased at most by $143,203. However,
respondent claims that without further information as to prior
distributions made to Russell, it cannot be determined that
Russell had sufficient basis in BBP to withdraw the entire grain
proceeds in 1994 as a tax-free distribution. Respondent claims
that Mr. Feldmann’s testimony that he was aware of the two loans
is inconsistent with his preparation of BBP’s 1994 return in
which each partner’s capital account was reported as being zero
at both the beginning and the end of 1994. Finally, respondent
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