-27-
Income Tax Regs.; see also sec. 7701(a)(2) (providing the same
definition of “partnership” as section 761(a) for purposes of the
Code); secs. 301.7701-1, 301.7701-2, and 301.7701-3, Proced. &
Admin. Regs.
In order to determine whether a partnership exists for
Federal income tax purposes, and is thereby subject to the
provisions of subchapter K, the Court must consider whether, in
light of all the facts, the parties in good faith and acting with
a business purpose intended to join together in the present
conduct of an enterprise. Commissioner v. Culbertson, 337 U.S.
733, 743 (1949). Factors the Court may consider in making this
determination include the agreement, the conduct of the parties
in execution of its provisions, their statements, the testimony
of disinterested persons, the relationship of the parties, their
respective abilities and capital contributions, the actual
16(...continued)
underwriting, selling, or distributing a particular issue of
securities, if the income of the members of the organization may
be adequately determined without computation of partnership
income. Such electing organizations are still considered
partnerships for purposes of the other sections of the Code,
however. Bryant v. Commissioner, 46 T.C. 848, 864 (1966) (“The
election under section 761(a) does not operate to change the
nature of the entity. * * * The partnership remains intact and
other sections of the Code are applicable as if no exclusion
existed.”), affd. 399 F.2d 800 (5th Cir. 1968). Subch. K,
therefore, governs the Federal income tax treatment of an entity
qualifying as a partnership under secs. 761(a) and 7701(a)(2),
and their accompanying regulations, unless it is an entity
specifically enumerated in sec. 761(a) that is eligible to elect
out of subch. K treatment and does so.
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