Opinion ID: 411284
Heading Depth: 1
Heading Rank: 7

Heading: R.C. Sec. 702(a) provides in relevant part as follows:

Text: Sec. 702. Income and Credits of Partner. (a) General Rule. In determining his income tax, each partner shall take into account separately his distributive share of the partnership's-- (8) other items of income, gain, loss, deduction, or credit, to the extent provided by regulations prescribed by the Secretary or his delegate, and (9) taxable income or loss, exclusive of items requiring separate computation under other paragraphs of this subsection. 9 Nor would it be affected by the distinction urged by Schneider and Rice, perhaps in tacit recognition that Williams may indeed have some effect on the assignment of income aspect of this case, that Williams involved a start-up situation, whereas this case involves partnerships in full operation, generating all too real losses, for the entire taxable year at issue. The partnerships involved in Williams had no rental income in 1974 because the related apartment projects were under construction, but they had reported losses (on the accrual method), consisting primarily of construction interest and advertising expenses, in excess of $1,000,000. By contrast, the partnerships at issue in this case had total rental income of approximately $240,000 during 1974. Schneider and Rice here make the bizarre argument (without benefit of citations) that if there was a prohibited assignment of pre-admission losses in this case that violation is negated or offset by the income earned during that period which was likewise allocated to the partners subsequently admitted. But of course, factually, the losses were not offset, which is what occasioned this suit, and the fact that profits and losses were allocated in the same fashion under the partnership agreements does not distinguish this case from Williams. See 680 F.2d at 383 n. 4. Nor has the Commissioner argued here, as a reason for disallowing deductions for pre-admission losses, that the losses were in any respect artificial or lacking in economic substance 10 See note 4, supra 11 See note 3, supra