-239-
(1947), for the proposition that the term “property” is to be
construed broadly. Petitioner contends that the term “property”
encompasses “whatever may be transferred.” In making his
contentions, petitioner relies on United States v. Stafford, 727
F.2d 1043 (11th Cir. 1984).
In United States v. Stafford, supra at 1052, the Court of
Appeals for the Eleventh Circuit held that the term “contribution
of property” in section 721 did not contemplate as a prerequisite
the legal enforceability of the rights asserted as “property”.
The Court of Appeals then concluded that a letter of intent that
was contributed to a partnership was a “contribution of property”
within the meaning of section 721. Id. at 1052. In doing so,
however, the Court of Appeals assumed arguendo that the
factfinder on remand would determine that the letter of intent
had value. Id. The Court of Appeals explained that “If the item
asserted as property is valueless,” then section 721 will not
apply. Id. at 1052 n.14.
We hold that a contribution of a worthless debt is not a
“contribution of property” for purposes of section 721 or the
partnership basis rules. See Hayutin v. Commissioner, T.C. Memo.
1972-127 (suggesting that a contribution of a worthless note to a
partnership would not be a true contribution since nothing of
value was transferred to the partnership), affd. 508 F.2d 462
(10th Cir. 1974); McKee et al., Federal Taxation of Partnerships
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