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C. The Corporation’s Alleged Embezzlement of Partnership
Funds
Petitioner contends that the corporation embezzled or
“laundered” partnership funds. Petitioner also makes vague
allegations of fraud against PTSI, the corporation, Mr. Stern,
and other individuals. As evidence of the alleged wrongdoing,
petitioner offers PTSI’s Form 1065 for the taxable year 2002,
including the Form K-1 prepared for the corporation, which
indicates the corporation received a distribution of $185,793 in
2002. As we understand his argument, petitioner contends that
PTSI improperly made distributions to the corporation while
refusing to make distributions to petitioner.
The agreement provides that “Available Funds shall be
distributed to the Partners pro rata in accordance with their
Participating Percentages”. This language indicates that if one
partner receives a distribution, the other partners should also
receive pro rata distributions. The parties agree that
petitioner did not receive a cash distribution from PTSI in 2002.
Thus, petitioner argues, the corporation violated the agreement
and embezzled funds. We disagree.
More than 10 years elapsed between the formation of the
partnership and the distribution to the corporation. There may
be a number of reasons why petitioner did not receive a cash
distribution in 2002. However, we do not speculate as to those
reasons. Petitioner did not introduce the testimony of Paul
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