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As a result of the passive loss limitations enacted in the
Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, the
investors were unable to deduct most of the losses allocated to
them by Timbercrest after 1986. During 1987, all 20 investors
stopped making payments on the promissory notes they had executed
in favor of Timbercrest as their capital contributions to the
partnership. The general partners made no additional capital
contributions to the partnership; consequently, the partnership
defaulted in payments to its creditors. The general partners
foreclosed the limited partnership interests, and the partnership
was terminated as of December 31, 1987.
With the demise of the partnership, the debtors (which
included petitioner), who were the makers of the $530,000
mortgage note, likewise defaulted on the note. Consequently,
Citizens, as holder of the note, instituted foreclosure
proceedings against the debtors under Utah Code Ann. sec. 78-37-1
(1992).3
3
Utah Code Ann. sec. 78-37-1 (1992) provides:
There can be one action for the recovery of any debt or
the enforcement of any right secured solely by mortgage upon
real estate which action must be in accordance with the
provisions of this chapter. Judgment shall be given
adjudging the amount due, with costs and disbursements, and
the sale of mortgaged property, or some part thereof, to
satisfy said amount and accruing costs, and directing the
sheriff to proceed and sell the same according to the
provisions of law relating to sales on execution, and a
special execution or order of sale shall be issued for that
purpose.
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Last modified: May 25, 2011