Harbor Cove Marina Partners Partnership, Robert A. Collins, A Partner Other Than The Tax Matters Partner - Page 27

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          in that it relates to information underlying the determination of           
          each HCMP partner’s share of liabilities and distributions.                 
               The linchpin of the four items is the parties’ dispute as to           
          whether HCMP terminated in 1998 for Federal tax purposes.                   
          Section 708(a) provides that a partnership continues to exist               
          until terminated.  Section 708(b) provides that a termination               
          requires the happening of one of two events.  First, under                  
          section 708(b)(1)(A), a partnership terminates when “no part of             
          any business, financial operation, or venture of the partnership            
          continues to be carried on by any of its partners in a                      
          partnership”.  Second, under section 708(b)(1)(B), a partnership            
          terminates when “within a 12-month period there is a sale or                
          exchange of 50 percent or more of the total interest in                     
          partnership capital and profits.”                                           
               The parties focus on the first of these events.  So do we.7            
          While the dissolution of a partnership is governed by State law,            
          the termination of a partnership for Federal tax purposes is                
          controlled by Federal law.  A termination of a partnership for              
          Federal tax purposes may be different from its termination,                 

               7 As to the second event, the liquidation of a partnership             
          interest, as reportedly occurred here, is not a “sale or                    
          exchange” for purposes of sec. 708(b)(1)(B).  Sec. 1.708-1(b)(2),           
          Income Tax Regs.  (Sec. 1.708-1, Income Tax Regs., was amended on           
          Jan. 3, 2001.  T.D. 8925, 2001-1 C.B. 496, 505.  That amendment,            
          in relevant part, removed old par. (b)(2) and redesignated old              
          par. (b)(1).  Id., 2001-1 C.B. at 500.  This part of the                    
          amendment applies to this case in that it is effective Jan. 4,              
          2001.  Id., 2001-1 C.B. at 496.)                                            

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