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on December 31, 1992, petitioner, acting as Archimedes’s
liquidating partner, distributed Archimedes’s 40-percent interest
in Onex Farms (the distributed partnership interest) to himself.
With respect to the distributed partnership interest, in a
letter dated April 11, 1993, addressed to Mr. Hunter, petitioner
states:
I have come to the conclusion it is not in my personal
or business best interest to pursue claims on
Archimedes[’s] interest in the Georgia farm property
called Onex Farms. A dispute with Russ Chambers would
eventually prove interminable, explosive, and most
likely what I would recover in the end will not be of
any value. Accordingly, I am surrendering
Archimedes[’s] interest in Onex Farms.
Notwithstanding the date of the letter, the partnership return
filed by Onex Farms for 1993, designated the partnership’s final
return, indicates that petitioner’s share of profits, losses, and
capital was 40 percent. The Schedule K-1, Partner’s Share of
Income, Credits, Deductions, etc., issued to petitioner by Onex
Farms indicates that petitioner received “withdrawals and
distributions” totaling $995,189 during 1993. Approximately,
$22,000 was withdrawn or distributed in cash. Onex Farms’ 1993
return further reflects that Pencot’s and Lever’s shares of
profits, losses, and capital were 40 percent and 20 percent,
respectively.
Onex Farms was terminated on December 3, 1993. On the same
date, Titan, L.L.C. (Titan), was formed by Lever and Pencot, each
owning 50 percent of the company. As indicated by its articles
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