                       T.C. Memo. 2001-253



                     UNITED STATES TAX COURT



                   MARICA CHAMA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8083-00.                 Filed September 24, 2001.


     Robert A. Bransley, for petitioner.

     Catherine M. Thayer, for respondent.


                       MEMORANDUM OPINION

     PAJAK, Special Trial Judge: Respondent determined a

deficiency in petitioner’s Federal income tax in the amount of

$8,200 for the taxable year 1993.   Unless otherwise indicated,

section references are to the Internal Revenue Code in effect for

the year in issue.
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     After concessions by petitioner, this Court must decide

whether petitioner is liable for income tax on $61,983, her

distributive share of partnership income.

     Some of the facts in this case have been stipulated and are

so found.   Petitioner resided in Chicago, Illinois, at the time

she filed her petition.

     Petitioner held a 5-percent interest in Sheridan Lake View

Partnership (Partnership).    The Partnership was engaged in the

business of renting buildings.

     On December 31, 1993, the Partnership entered into a

transaction where it sold a parcel of real estate commonly known

as 5050 North Sheridan Road, Chicago, Illinois (Sheridan), to

Steven and Craig Strange (the Stranges), and purchased two

parcels of real estate commonly known as 1101-03 West Pratt

Avenue, Chicago, Illinois (Pratt), and 3134-40 West Montrose

Avenue, Chicago, Illinois (Montrose), from the Stranges.    The

sales price of the Sheridan property was $3,975,000, and the

purchase price of the Pratt and Montrose properties,

collectively, was $1,075,000.    A substantial mortgage was assumed

by the Stranges.

     For the taxable year 1993, Gerard Mader prepared the

Partnership’s tax return.    The parties stipulated that the

Partnership return included a Form 8824, Like-Kind Exchanges, and

reported a gain in the amount of $1,239,660 from the sale of the
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Sheridan property and the purchase of the Montrose and Pratt

properties.    Mr. Mader prepared the Schedules K-1, Partner’s

Share of Income, Credits, Deductions, Etc., reflecting each

partner’s distributive share of that gain.    Petitioner’s Schedule

K-1 reflected a gain in the amount of $61,983.

     Petitioner did not report the $61,983 on her Federal income

tax return for 1993.    Respondent determined, inter alia, that

petitioner should have reported the $61,983 as a capital gain

pursuant to section 61(a)(13).

     Section 702(c) provides that in any case where it is

necessary to determine the gross income of a partner for purposes

of this title, such amount shall include his distributive share

of the gross income of the partnership.    Petitioner states that

she did not receive a cash distribution but that is irrelevant

under the statute.    Each partner is taxable upon his or her

distributive share of the partnership profits, whether or not

distributed.    Sec. 702; sec. 1.702-1(a), Income Tax Regs.    Or to

put it another way, a partner is taxable on his or her

distributive or proportionate shares of partnership income,

irrespective of whether that income is actually distributed to

him or her.    United States v. Basye, 410 U.S. 441, 447-8, 454

(1973); Cipparone v. Commissioner, T.C. Memo. 1985-234.       In the

instant case, it appears that the Partnership reinvested

petitioner’s share of the gain.
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     The parties stipulated that petitioner’s interest in the

Partnership was 5 percent and that the Partnership had a gain of

$1,239,600.   Therefore, 5 percent of that amount, the $61,983

reported on the Schedule K-1, is the “distributive share” which

petitioner must report as her gross income.     Sec. 702(c).

Accordingly, we sustain respondent’s determination.



                                            Decision will be entered

                                       for respondent.
