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Investors. The return of the Investors’
promissory notes is intended as a purchase price
reduction within the meaning of I.R.C. Section
108(e)(5).
Under the Settlement Agreement, therefore, an investor
could “abandon” his or her interest or interests in the
partnership “by conveying them to the Trustee”, or the
investor could elect to “convey” his or her interest or
interests in the partnership to the trustee. In either
event, the investor’s promissory note would be returned.
Under the Settlement Agreement, the investor also assigned
any claims he or she had against third parties to Admiral
and agreed to a division of any moneys distributed from a
court fund.
An integral part of the Settlement Agreement was the
undertaking by Admiral and the investors who joined the
agreement to obtain the approval of the trustee and the
Bankruptcy Court to another agreement between and among
the trustee and the investors. Under that agreement, the
trustee would agree to accept any limited partnership
interests that were abandoned pursuant to the terms of the
Settlement Agreement, and the parties agreed to mutually
release all claims they might have against each other.
The agreement also provides as follows:
10. Investors agree to seek a “test case”
determination letter or a private letter ruling
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