Harbor Cove Marina Partners Partnership, Robert A. Collins, A Partner Other Than The Tax Matters Partner - Page 28

                                       - 28 -                                         
          dissolution, or winding-up under State law, and a partnership may           
          continue to exist for Federal tax purposes even though State law            
          provides that the partnership has terminated, dissolved, or                 
          wound-up.  Fuchs v. Commissioner, 80 T.C. 506, 509-510 (1983);              
          Neubecker v. Commissioner, 65 T.C. 577, 581-582 (1975); see also            
          Maxcy v. Commissioner, 59 T.C. 716 (1973).  When a partnership              
          terminates under Federal law, its taxable year closes on the same           
          date.  Sec. 1.708-1(b)(3), Income Tax Regs.                                 
               For purposes of Federal tax law or, more specifically,                 
          section 708(b)(1)(A), the date of termination is the date on                
          which the partnership winds up its affairs in cessation of its              
          business operation.  Sec. 1.708-1(b)(3)(i), Income Tax Regs.                
          Whether a partnership has done so is a factual determination that           
          generally rests on an analysis of the various subsidiary elements           
          of proof.  The regulations interpreting section 708(b)(1)(A)                
          establish a liberal approach to a finding of a business nexus               
          sufficient not to terminate a partnership.  In accordance with              
          those regulations, a partnership continues to exist even when its           
          operations are substantially changed or reduced in a period of              
          winding up, and even when its sole asset during that period is              
          cash.  Sec. 1.708-1(b)(1), (3)(i), Income Tax Regs.  A                      
          termination under section 708(b)(1)(A) occurs only when “the                
          operations of the partnership are discontinued and no part of any           
          business, financial operation, or venture of the partnership                

Page:  Previous  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  Next

Last modified: May 25, 2011