Lipke v. Commissioner

81 T.C. 689 (1983)

From our private database of 45,900+ case briefs, written and edited by humans—never with AI.

Lipke v. Commissioner

United States Tax Court
81 T.C. 689 (1983)

  • Written by Heather Whittemore, JD

Facts

In 1972 Lawrence Reger, Clarence Rautenstrauch, and Herbert M. Luksch (collectively, the general partners) formed a limited partnership called Marc Equity Partners (the partnership). The general partners made a capital contribution to the partnership of $100 total. Limited partnership interests were sold to 14 limited partners (the original limited partners) for a total of $1,175,000. The partnership agreed to allocate its profits and losses to the limited partners. The partnership experienced financial issues, and in 1975, James H. Williams, Francis M. Williams, and Kenneth E. Lipke (the new partners) became limited partners after making a capital contribution of $216,000. Reger also made a new capital contribution. In October 1975, the partnership executed a new partnership agreement that created two classes of limited partners. Generally, Class A contained the original limited partners, and Class B contained the new partners. The agreement explained that Class A would own 49 percent of the partnership, Class B would own 49 percent of the partnership, and the general partners would own 2 percent of the partnership. The agreement also provided that 98 percent of the partnership’s 1975 losses would be allocated to the Class B limited partners in consideration of their capital contributions. In 1975 the partnership reported losses of approximately $934,000. Lipke, James Williams, Francis Williams, Rautenstrauch, and Reger (collectively, the partner plaintiffs) (plaintiffs) reported their share of the losses, and the Commissioner of Internal Revenue (the Commissioner) (defendant) disallowed the losses accrued before October 1975. The partner plaintiffs appealed.

Rule of Law

Issue

Holding and Reasoning (Fay, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 741,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 741,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 45,900 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 741,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 45,900 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership