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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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