A California partnership ("HCP") owned by a U.S. subsidiary of Bell Canada Enterprises ("BDI") and a subsidiary of BDI had expended substantial sums in developing a luxury residential condominium project in California (the "HCP Project"). After transferring a small apartment project ("Tremont") into the partnership, all the interests in the partnership were sold to the taxpayer and a group of Canadian individuals. Immediately thereafter the partnership sold the HCP Project to BDI and BDI and its subsidiary withdrew from the partnership. The partnership continued to hold Tremont.
The taxpayer was found to become a member of a HCP with the result that it and the other Canadian taxpayers could deduct a loss arising on the sale of the HCP Project by HCP. The property management business associated with Tremont was pre-existing and continued by the Canadians; and although the original American partners and the taxpayer held that property management business jointly only for a brief period of time, the duration of carrying on a business is not determinative. Furthermore, the fact that the predominant purpose of the taxpayer was realization of the loss and the fact that the profits subsequently generated by Tremont did not match the quantum of that loss did not establish that the taxpayer did not acquire its interest in HCP with a view to profit.