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pertained to the last installments of the partnership note, due
between January 1, 1990, and January 1, 1992, and payable no
later than September 30, 1992. According to the subscription
agreement, Hambrose had the right to pursue a limited partner for
the amount of the unpaid balance of his or her pro rata share of
the assumed portion of the partnership note at maturity.
The POM included the following projection of tax benefits
per partnership unit for the first years of the transaction:
Projected Loss as a Percent
Year Investment Tax Loss of Investment
1984 $ 6,000 $24,547 409
1985 113,000 44,289 341
1986 113,000 40,050 308
1987 113,000 28,477 219
Total $ 45,000 $137,363 305
1 Does not include interest at 11 percent per annum.
The POM contained an opinion by the law firm of Friedman &
Shaftan, P.C. That opinion explained in considerable detail the
application of the at-risk provisions of section 465 and
concluded that the transaction would likely survive a challenge
by respondent.
Decedent's Decision to Invest
During the fall of 1984, decedent executed subscription
documents to purchase 10 units in the partnership, for which he
paid a total of $450,000 cash over the period from 1984 through
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