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E. were from LPP profits that belonged, and were taxable, to
Julian W. and petitioner, not to Julian E. See, e.g., Bitker v.
Commissioner, T.C. Memo. 2003-209 (partnership’s payments of
interest on the taxpayer-partner’s personal debt included in his
taxable distributions from the partnership). Thus, assuming
arguendo that the 1986 agreement represented a binding agreement
on the part of LPP’s directors/shareholders to make
disproportionate distributions to Julian E., petitioner has
failed to establish that the payments did, in fact, constitute
distributions with respect to Julian E.’s shares rather than
distributions in discharge of Julian W.’s and petitioner’s
personal debts to Julian E. and, therefore, distributions with
respect to their shares. Moreover, the conflicting evidence
regarding the purpose of the fixed distributions to Julian E.
raises the possibility that they were intended to achieve both of
those purposes and, therefore, that they were made, in part, with
respect to Julian E.’s shares and, in part, with respect to
Julian W.’s and petitioner’s shares. In that event, they very
well may have constituted proportionate distributions, a result
fully consistent with the continued existence of one class of LPP
stock.
3. Conclusion
Petitioner has failed to prove that LPP had more than one
class of stock in 1998.
III. Conclusion
In light of petitioner’s concessions and our disposition of
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