Larson v. Commissioner

65 T.C. No. 10, 1975 U.S. Tax Ct. LEXIS 52

Opinion

PHILLIP G. LARSON, ET AL., ¹ Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Larson v. Commissioner

Docket Nos. 5530-72, 5266-73, 5267-73.

United States Tax Court

1975 U.S. Tax Ct. LEXIS 52; 65 T.C. No. 10;

October 21, 1975, Filed; WITHDRAWN November 7, 1975

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Petitioners acquired participating interests in certain real estate syndicates organized under the California Uniform Limited Partnership Act. The sole "general partner" was a corporation incorporated in California for the purpose of organizing and acting as "general partner" of such syndicates and selling the limited partnership interests therein. The general partner invested no funds in the syndicates and its participation in the cash flow and profits was contingent upon the repayment first to the limited partners of their after-tax investment. The limited partnership agreements provided for dissolution by vote of the limited partners and for the removal or election of a new general partner. Such partnership interests were sold in California as "securities" and were transferable without affecting the continuity of the enterprise. Held: The limited partnerships were taxable as "associations" within the meaning of section 7701(a)(3), I.R.C. 1954. Petitioners were not entitled to deduct their proportionate share of the syndicate losses on their income tax returns.

Stanton H. Zarrow and Frederick A. Richman, for the petitioners.

Nicholas G. Stucky, for the respondent.

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QUEALY

QUEALY, Judge

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Footnotes

• 1. The following proceedings are herewith consolidated: American Precision Metals, docket No. 5266-73, and Phillip G. Larson, docket No. 5267-73.