- 62 -
their formal approval, pursued bona fide litigation over the
foreclosure order.
This case bears some similarity to Energy Res. Ltd. Pship.
v. Commissioner, T.C. Memo. 1992-386. In that case, a
partnership constructed an oil cleansing refinery, using revenue
bonds guaranteed by the U.S. Small Business Administration (SBA)
and secured by a mortgage on the facility. In 1983, shortly
after the facility became operational, financial and technical
difficulties forced the partnership to shut the facility down.
The partnership went into bankruptcy. Eventually, SBA assumed
maintenance and security responsibility for the plant.
Nevertheless, the partnership, through its principals, continued
efforts to raise additional funds for the project, proposed
various types of arrangements to potential purchasers, resisted
efforts by SBA to foreclose on the property, and engaged in
negotiations with SBA and the bankruptcy court. In 1984, the
bankruptcy court granted SBA’s motion to sell the plant to a
third party. In holding that the partnership had not abandoned
the plant when it was shut down in 1983, this Court observed that
the level of activity displayed by the partnership’s principals
showed that they considered the project to be of continuing
utility and was “sufficiently extensive, repeated, continuous, or
substantial” to negate a conclusion that they had abandoned the
project.
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011