This section contains the nature of the case and procedural background.

Ps were members of a partnership that owned land. The partnership transferred the land to several corporations. The corporations sold lots on the land and derived income from such sales. Pursuant to § 482, P allocated all of the sales income to the partnership, rather than the corporations. D contended that the partnership was responsible for the development of the lots and the corporations were mere corporate shells. The taxpayers contended the corporations actively participated in the development. Ps appealed.

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