Cooper River Office Building Associates, Management of Cooper River, Inc., Tax Matters Partner - Page 4

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          calculated under the economic accrual method, respondent treated            
          the portion of each monthly payment that does not represent                 
          allowable interest as a repayment of principal.                             
               Respondent’s calculation thus reduces or amortizes each                
          month the principal portion of the Partnership’s indebtedness on            
          the promissory note that is to be recognized for Federal income             
          tax purposes.  Under such calculation, the allowable interest               
          deduction for each succeeding month is also reduced, and the full           
          $2,370,000 principal portion of the Partnership’s indebtedness              
          that is to be recognized for Federal income tax purposes will be            
          treated as paid off in just over 6 years.                                   
              Petitioner argues that because the Court in the first of the           
          above Levy opinions, 92 T.C. at 1365, sets forth a schedule of              
          the precise amount of the interest deductions allowable under the           
          economic accrual method (based on the Partnership’s total stated            
          indebtedness on the promissory note of $4,770,000) and because              
          the Court in the second of the above Levy opinions, T.C. Memo.              
          1991-646, recognized for Federal income tax purposes                        
          approximately one-half or $2,370,000 of the $4,770,000 stated               
          principal on the indebtedness, petitioner should now be allowed             
          to treat the same percentage, or one-half, of each monthly                  
          $43,725 payment (namely, $21,862) as interest properly accruable            
          under the economic accrual method and to disregard the balance of           
          each monthly payment for purposes of calculating, for subsequent            






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