Estate of Austin Korby - Page 5

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          its formation until 1999.  Austin and Dennis signed the KPLP                
          agreement as cotrustees of the living trust.  The KPLP agreement            
          provided for management fees to be paid to the general partner              
          “to be measured by the time required to manage and administer the           
          partnership, by the value of property under the general                     
          partner(s) administration, and by the responsibilities the                  
          general partner(s) assume in discharging of the duties of                   
          office.”  The general partner was to decide the amounts of the              
          management fees.  The KPLP agreement also required KPLP to                  
          reimburse the general partner for “all reasonable and necessary             
          business expenses incurred in managing and administering the                
               KPLP was not funded and did not commence business until                
          spring 1995; therefore, KPLP did not file a tax return for 1994.            
          In 1995, the living trust transferred the money market account              
          with a balance of $37,841 to KPLP.  In exchange, the living trust           
          received a 2-percent general partnership interest.  Also in 1995,           
          the Korbys transferred the following assets to KPLP:  (1) Stocks            
          valued at $1,330,442; (2) State and municipal bonds valued at               
          $449,378; and (3) U.S. savings bonds worth $71,043 (the                     
          transferred assets).3  In exchange, Austin and Edna received a              
          98-percent limited partnership interest.  Austin and Edna then              

               3In 1994, the Korbys reported income from these assets of              

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Last modified: May 25, 2011