-319-
formed a good faith intent to conduct an enterprise with a
business purpose. The STJ report implicitly accepted Kanter’s
testimony that Century Industries (as opposed to Kanter and
Weisgal) earned the commitment fees in exchange for the
partnership’s evaluating and considering whether it would invest
in various business opportunities presented to it.
D. Analysis
In Commissioner v. Culbertson, supra, the Supreme Court held
that to be treated as a partner in a partnership for Federal
income tax purposes, a person must have contributed either
capital or services to the partnership. Id. at 738-740.
However, in Culbertson, the Court declined to impose a rigid
standard for determining partner status and instead held the
governing test is “whether, considering all the facts * * * the
parties in good faith and acting with a business purpose intended
to join together in the present conduct of the enterprise.” Id.
at 742.
After Culbertson, Congress enacted statutory provisions to
address the recognition of partners in family partnerships in
which capital is a material income-producing factor.
Specifically, section 704(e)(1) provides, as to partnerships in
which capital is a material income-producing factor, that a
person owning a capital interest in such a partnership must be
recognized as a partner, whether that person’s capital interest
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