by several courts. The court in Ginsburg v. United States, 184 Ct. Cl. 444, 396 F.2d 983, 988 (1968) indicated that the apparent intention of Congress in adding § 708 to subchapter K of the Internal Revenue Code of 1954 without a cross reference to the definition section (§ 761) was "that the issue of terminating an existing partnership [was] to be evaluated solely on the basis of Section 708 without regard to whether the 'organization' of individuals involved, if judged ab initio, would be considered a partnership under Section 761(a)." Based on this opinion, it would not matter that only one partner was left to continue carrying on the business of the partnership. As long as the business of the partnership is carried on by any partner, the partnership has not been terminated in accord with § 708(b)(1)(A).
In a case very similar to this one, another court held that "even though the partnership dissolved . . . when petitioner withdrew and ceased to be associated with the carrying on of the partnership business, there continued to be a valid partnership until such time as the partnership actually terminated." Fuchs v. Commissioner of Internal Revenue, 80 T.C. 506, 510 (1983). The plaintiff here also withdrew and ceased to be associated with the running of The Pub, the partnership business, but the partnership continued to exist until he sold his interest in 1980.
Because the partnership did not terminate until 1980, the plaintiff is not entitled to a refund for the taxes paid for 1978 and 1979 on the share of the partnership's income attributed to him.
THEFT LOSS DEDUCTION
This Court, having found that the plaintiff was a partner in a partnership in 1978 and 1979, must now consider whether he was entitled to take a theft loss deduction in those years for his allegedly unreceived share of the partnership's income.
Section 165 of the Internal Revenue Code states that "any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers such loss." 26 U.S.C. § 165(e). "The IRS has construed this as meaning that a theft loss deduction can be taken only in the year of discovery." Asphalt Industries, Inc. v. C.I.R., 411 F.2d 13, 15 (3d Cir. 1969). The plaintiff bears the burden of establishing when he discovered his theft loss. Botwinik Brothers of Mass., Inc. v. Commissioner of Internal Revenue, 39 T.C. 988, 998 (1963).
The plaintiff, in his affidavit, attempts to convince this Court that he learned of the theft losses when he received copies of Form 1065 and/or Schedule K during 1978 and 1979 at the times these documents were dated. The plaintiff further states that he has no recollection of looking at these documents or of their contents if he did look at them when they were received. These statements by the plaintiff are all that he offers to satisfy his burden of proving when he discovered the theft losses.
The plaintiff has failed to convince this Court that he discovered the thefts in 1978 and 1979, respectively, or that there is even a genuine issue of material fact as to his discovery of the thefts in those years. Therefore, he is not entitled to deduct the theft losses in 1978 or 1979. As to the theft losses which may be deductible in subsequent years, the plaintiff must resort to an amended return for the year in which such losses were discovered.
The plaintiff also seeks attorneys fees under 26 U.S.C. § 7430(a). In view of the disposition reached here, we deem that the plaintiff is not entitled to such fees.
An appropriate order will be issued.
AND NOW, this 7th day of August, 1985,
IT IS ORDERED that the Motion for Summary Judgment filed by the plaintiff, Peter T. Fensel, is DENIED.
IT IS FURTHER ORDERED that the Motion for Summary Judgment filed by the defendant, the United States of America, is GRANTED for the reasons stated in the accompanying Opinion, and judgment is entered in favor of the defendant, the United States of America, and against the plaintiff, Peter T. Fensel.
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