-321-
tax purposes, and Century Industries did not file an election
under section 6231(a)(1)(B)(ii) to have the exception for small
partnerships not apply, it follows that Century Industries was a
small partnership, within the meaning of section 6231(a)(1)(B),
to which the TEFRA partnership procedures do not apply.
Consequently, we hold the Court has jurisdiction in these
deficiency cases to determine whether half of the payments to
Century Industries during 1983, 1984, and 1986 represent income
earned by Kanter.
The record shows that, other than Kanter and Weisgal,
Century Industries’ purported partners rendered no services and
contributed only insignificant amounts of capital to the
partnership during the years at issue. Moreover, capital was not
a material income-producing factor for Century Industries during
1981 to 1986. No funds of any significance were collected from
the alleged partners until 1986, and most of Century Industries’
income during the period 1981 to 1986 consisted of fees and
commissions. Although Kanter asserted that the partnership was
formed as an investment vehicle, the partnership did not make any
significant investments during the period 1981 to 1986. During
the same period, Kanter and Weisgal provided professional
services for Silite, Satcorp, C&S, and others and arranged for
the payments for those services to be remitted to Century
Industries. Thus, insofar as Century Industries is respected as
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