- 13 - Pecaris allocated the gain to its three partners in accordance with their interests in profits, as specified in the Pecaris partnership agreement. Accordingly, Pecaris reported petitioner’s distributive 25-percent share of the gain from the sale, $827,968, on its Schedule K-1, and that is the amount of the adjusting increase in petitioner's gain as determined in respondent's statutory notice to petitioner. Coastal and petitioner reported the transactions affecting petitioner’s interest in the Mall as nontaxable transactions on their respective returns for 1988. The yearend tax balance sheet, Schedule L of Coastal's 1988 Form 1065, disregarded petitioner's capital contribution of $700,000 as having any effect for tax purposes on petitioner's capital account or on Coastal's basis in the Mall, and showed Coastal as having a cost basis in the Mall substantially less than $4.8 million, on the order of what would have been approximately $4.1 million as of the time of the conveyance of the Mall by Pecaris to Coastal.10 10The Coastal 1988 yearend Schedule L Tax Balance Sheet and schedules thereto do not disclose or show any note or other obligation of Coastal to HGM in respect of the $100,000 commission. The Coastal balance sheet and Schedule M Reconciliation of Partners' Capital Accounts show the following: Schedule L - Balance Sheet Assets Cash $74,886 Current liabilities $102,026 Trade accounts and receivables 78,159 Mortgages, etc. 4,071,244 (continued...)Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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