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amount of $1,145,508. On Form 3468, Computation of Investment
Credit, which they submitted with their joint Federal income tax
return for 1985, petitioners calculated the amount of their
available credit with respect to regular investment credit
property as $114,551 and the amount of their available credit
with respect to business energy investment credit property as
$114,000, for a total of $228,551, based on the Schedules K-1.
Of this total amount, they claimed $45,824 as a credit against
their tax liability for 1985, leaving a total unused investment
credit of $211,492.2 In 1986 petitioners filed an amended
Federal income tax return for 1984, on which they claimed a
refund resulting from the carryback of $25,471 of the unused
investment credit for 1985. On their joint Federal income tax
return for 1986 petitioners used $118,179 of the balance of the
unused investment credit to offset recapture tax incurred
pursuant to section 47(a) on certain Ethanol equipment disposed
of in that year.
A notice of final partnership administrative adjustment
(FPAA) was mailed to the tax matters partner of Ethanol on
December 5, 1991, and a timely petition for readjustment was
filed with this Court on April 30, 1992. At some time in early
1992, prior to the filing of the petition on behalf of Ethanol,
petitioners filed amended Federal income tax returns on Form
1040X for both the 1985 and 1986 taxable years. On their amended
return for 1985 they recalculated their tax liability, deleting
2 In the calculation of the carryback/carryforward
alternative minimum tax for 1985 the amount of $28,765 is added.
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