Clarissa W. Lappo - Page 2

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               Unless otherwise indicated, all section references are to              
          the Internal Revenue Code as amended, and all Rule references are           
          to the Tax Court Rules of Practice and Procedure.                           
                                  FINDINGS OF FACT                                    
               The parties have stipulated many of the facts, which we                
          incorporate by this reference.  When petitioner filed her                   
          petition, she resided in Fruitport, Michigan.                               
          A.  Formation of the Lappo Family Limited Partnership                       
               On October 20, 1995, petitioner and her daughter, Clarajane            
          Middlecamp (Clarajane), formed, pursuant to Georgia law, the                
          Lappo Family Limited Partnership (the partnership).  On April 19,           
          1996, petitioner and Clarajane conveyed to it a portfolio of                
          marketable securities (principally municipal bonds) and certain             
          parcels of Michigan real estate that were subject to a long-term            
          lease.1                                                                     
               After these initial capital contributions, petitioner’s and            
          Clarajane’s respective partnership interests were as follows:               
                              General             Limited                             
                         Partnership         Partnership                              
          Partner             Interest            Interest       Total                
          Petitioner          1.0                 98.7      99.7                      
          Clarajane             .2                  .1            .3                  
          Total               1.2                 98.8           100.0                


               1 The real estate parcels, in Fruitport, Mich., and South              
          Haven, Mich., were sites of two retail lumberyards formerly owned           
          and operated by the Lappo family.  In June 1995, Wickes Lumber              
          Co. purchased all the lumberyard assets other than the real                 
          estate and entered into a 15-year lease for the real estate.                




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