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deduction (e.g., from a public sale of the marina).8 While
HCMP’s managing general partner may have subjectively intended to
terminate HCMP for Federal tax purposes during 1998, the fact of
the matter is that it failed to wind up HCMP’s business operation
in accordance with the procedures which the HCMP partners as a
whole had agreed would be applied in such a situation. The
agreed-upon procedures of paragraph 12 state clearly and
unequivocally that the managing general partner of HCMP shall in
the case of HCMP’s dissolution wind up and liquidate the
partnership by “selling the Partnership property”.
For Federal tax purposes, Congress has given the partners of
a partnership broad authority to negotiate the terms of their
business relationship, including the terms governing their
business’s formation, operation, and dissolution, so as to
achieve simplicity, flexibility, and equity as between the
partners. See Foxman v. Commissioner, 41 T.C. at 549-552 (and
the legislative history cited therein); see also Moore v.
Commissioner, 70 T.C. 1024, 1033 (1978); Kresser v. Commissioner,
8 We also do not believe that Collins’s HCMP partnership
interest was effectively liquidated as of the end of 1998 in that
(1) he had filed the lawsuit challenging as inconsistent with the
partnership agreement his right to keep the $389,662 check sent
to him as a liquidation distribution and (2) he had delivered
that check to the trial court pending resolution of the lawsuit.
Cf. Bones v. Commissioner, 4 T.C. 415, 420 (1944) (taxpayer’s
refusal to cash a check did not result in constructive receipt of
the income where cashing the check would impair the taxpayer’s
legal position by creating a situation that might be construed as
an accord and satisfaction concerning a disputed claim).
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