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annual basis adjustments for partnership
distributive items, pursuant to IRC Sect. 705.,
the net effect of the investor note discharge, to
each limited partner, is in general, a recapture
under IRC 731(a)(1) of the net balance of all
previously distributed tax losses and capital
distributions. The constructive distribution
pursuant to IRC 752(b) results in a negative (IRC
733) basis adjustment to partners, which brings
basis back to zero (but not below zero) prior to
12/31/89.
The RAR includes the following schedule to show how the
adjustment in the amount of $385,519 was computed:
Dakotah Hills Office Limited Partnership Schedule of Basis Computation
Sec. Adj. Basis
Initial Loss 733 BasisAfter
Basis DistributionDifferenceReduction Reduction
Langlee, Scott W. $41,600 $38,682$2,918 $2,918 --
Needles, Belverd E. 20,800 16,7004,100 4,100 --
Wilson, George S. & Beverly M.20,800 16,7004,100 4,100 --
Brigham, Stephen K & Lindy20,800 16,7004,100 4,100 --
Del Deo, Vito & Christine20,800 16,7004,100 4,100 --
Bienias, Stauford 20,800 16,7004,100 4,100 --
Rinehart, Carroll A & Marilyn J. 41,600 33,3938,207 8,207 --
Richardson, Andrew W. 41,600 39,8381,762 1,762 --
Bol, Douglas J. 41,600 39,8371,763 1,763 --
Ferganchick, Bert & Ann62,400 50,08312,317 12,317 --
Johnson, Gary 20,800 16,7004,100 4,100 --
Stephens, William M. & Dianne B. 41,600 33,3938,207 8,207 --
Montgomery, Victor 41,600 33,3938,207 8,207 --
Johnson, Woodrow J. 20,800 16,7004,100 4,100 --
457,600 385,519
Discussion
All of the adjustments at issue in these consolidated
cases are based upon the fact that the limited partners who
joined the Settlement Agreement with Admiral obtained the
cancellation of their investor notes. Respondent
determined that each of those partners thereby realized a
decrease in his or her share of partnership liabilities.
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