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credits. Under the Coastal partnership agreement, petitioner was
obligated to make a capital contribution of $700,000 to Coastal.
Petitioner satisfied that obligation to Coastal by causing
Pecaris to transfer to Coastal all right, title, and interest in
the Mall, and Coastal credited $700,000 to petitioner's capital
account; as a result, petitioner became the dominant partner in
Coastal, with a 90-percent interest in capital and profits.
There was thus a circle of obligations in the amount of $700,000,
which were netted against one another and discharged without the
need for settlement in cash. In sum, Coastal discharged its
obligation to Pecaris by satisfying the Pecaris obligation to
petitioner by crediting him with a $700,000 capital contribution,
and petitioner's obligation to Coastal was satisfied by his
causing Pecaris to transfer to Coastal all right, title, and
interest in the Mall for a cash consideration that was $700,000
less than Coastal was obligated to pay under the terms of the
purchase agreement.
There is one other problematic element in the computation of
the amount realized by Pecaris. The Coastal escrow statement
discloses that there was a distribution to Coastal of $78,063 of
excess mortgage loan proceeds. As a result, it appears that the
cash proceeds of the sale of $4.1 million should be reduced by
$78,063, because Pecaris did not receive that amount in cash.
However, it also appears that the amount of the mortgage proceeds
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