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ended February 28, 1985, reflect a $2,029,390 entry for the La
Playa Condominium mortgages and a $79,990 accrued mortgage
receivable for the mortgages through March 16, 1985. The journal
indicates that these mortgages were transferred from the estate
to the trusts as a "partial debt settlement". All transfers of
mortgages were accomplished by book entries on the records of
Berkley.
Berkley made intermittent transfers of funds to the trusts.
Berkley made the following transfers to the trusts during the
fiscal year ended February 28, 1985:
Oct. 17, 1984 $12,000
Nov. 9, 1984 5,000
Jan. 4, 1985 25,000
Jan. 29, 1985 1,000
Feb. 5, 1985 14,000
Feb. 14, 1985 1,000
Feb. 20, 1985 1,000
Total 59,000
Berkley's transfers of funds to the trusts were noted in the
trusts' ledger under the "Berkley Mortgage Corporation" account.
The estate had no distributable net income (DNI) in its
fiscal years ended March 31, 1984 and 1985. For its fiscal year
ended March 31, 1985, the estate's Form 1041, U.S. Fiduciary
Income Tax Return, reported negative total income of $327,946.
Trust C reported DNI of $101,890 on its Form 1041 for its taxable
year ending February 28, 1985.
During 1985, Trust C distributed $46,936 to petitioner, and
$52,101 remained in a brokerage account in petitioner's name on
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