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The partnership agreement of Funny Hats states that Funny
Hats was “created to establish and conduct the business of real
estate ownership and management” and that its place of business
was the address of the residence. Funny Hats conducted no
business and was not operated with an intent to make a profit.
Decedent wanted to divest herself of the responsibility of
maintaining the residence, but the donees wanted her to keep the
residence. The donees persuaded decedent to retain the residence
by telling decedent that they would maintain the residence as
long as decedent furnished the funds necessary to do so. The
donees enjoyed the residence as a place to vacation, to get
together as a family, or simply to relax.
The only assets of Funny Hats were the residence and a
checking account. With four exceptions, the checking account of
Funny Hats was funded by $69,250 of transfers from decedent, a
$6,774 loan from her in 1999, and $1,712 of interest. (We have
attached as an appendix our reconciliation of each year’s
beginning and ending cash balances of the Funny Hats checking
account.) The exceptions are: (1) Funny Hats deposited $348,600
at the end of 2000 from a sale of the residence to David Disbrow,
(2) each of the partners of Funny Hats, other than David Disbrow,
contributed to it $1,000 and $800 in 1995 and 1997, respectively,
(3) David Disbrow contributed to Funny Hats an additional $1,000
and $800 in 1995 and 1997, respectively, and he contributed
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