Cooper River Office Building Associates, Management of Cooper River, Inc., Tax Matters Partner - Page 9

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          1985                                                                        
          January       $ 43,725     $ 8,042     $ 35,683     $841,673                
          February      43,725       7,715       36,010       805,663                 
          March         43,725       7,385       36,340       769,323                 
          April         43,725       7,052       36,673       732,650                 
          May           43,725       6,716       37,009       695,641                 
          June          43,725       6,377       37,348       658,293                 
          July          43,725       6,035       37,691       620,602                 
          August        43,725       5,689       38,036       582,566                 
          September     43,725       5,340       38,385       544,181                 
          October       43,725       4,988       38,737       505,445                 
          November      43,725       4,633       39,092       466,353                 
          December      43,725       4,275        39,450      426,903                 
            1985 Total  $524,700     $74,246     $450,454                             

               A number of cases have held that even though an underlying             
          transaction or stated indebtedness is held to be a sham, devoid             
          of economic substance, and based on an inflated purchase price,             
          recourse indebtedness associated with the transaction may still             
          be regarded as genuine and related interest expense may still be            
          deductible.  See, e.g., Rice’s Toyota World, Inc. v.                        
          Commissioner, 752 F.2d 89, 95-96 (4th Cir. 1985), affg. in part,            
          revg. in part, and remanding 81 T.C. 184 (1983); Coleman v.                 
          Commissioner, 87 T.C. 178, 213 (1986), affd. without published              
          opinion 833 F.2d 303 (3d Cir. 1987).  Where, however, stated                
          indebtedness associated with such a sham transaction represents             
          nonrecourse indebtedness, the cases are consistent in disallowing           
          claimed interest deductions relating to the nonrecourse                     
          indebtedness.  See, e.g., Jacobson v. Commissioner, 915 F.2d 832            
          (2d Cir. 1990), affg. in part, revg. in part, and remanding in              
          part T.C. Memo. 1988-341; Polakof v. Commissioner, 820 F.2d 321,            
          324 (9th Cir. 1987), affg. per curiam T.C. Memo. 1985-197; Hulter           





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