You are a tax associate at JBB & Associates. Your manager (Alice Cooper) has asked you to write a tax research memo regarding the following issue for one of the firms clients. The memo should be addressed to Ms. Cooper regarding the tax treatment of the following facts.

In 2016 Ozzy formed a partnership with his two young children (Jack, age 15 and Kelly, age 12). The partnership holds rental property the daily activities/management are performed by a professional management company. The partnership is extremely profitable and last year made large distributions to the three owners. Ozzy had the childrens distributions placed into a college fund for their benefit when they are of age. The children have no dealings with the partnership, however, the partnership agreement does stipulates that the children can sell their ownership interest only to their father. Has Ozzy legitimately formed a partnership?