George A. and Marysue Coward - Page 5

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            partnership and on behalf of each of six limited partners,                                   
            including petitioner, as attorney-in-fact.                                                   
                  The partnership filed a Form 1065, U.S. Partnership Return                             
            of Income, for the taxable year ending December 31, 1978.  The                               
            return reports that the partnership started business on January                              
            20, 1978.  The Form 1065 shows total partnership capital of                                  
            $3,100.                                                                                      
                  The Schedules K-1 attached to the partnership return                                   
            allocated the total purchase price indicated on the January bill                             
            of sale as the basis of the cattle to the limited partners.  The                             
            basis of new investment property with a life of 7 or more years                              
            was reported as $1,203,020.  The cost of used investment property                            
            with a life of 7 or more years was reported as $78,600.  The                                 
            Schedules K-1 reflect the following partnership interests and                                
            allocations:                                                                                 
            Profit  Loss    Basis New   Cost Used                                                        
            Capital    Sharing Sharing Investment  Investment                                            
            Partner           Account    Ratio   Ratio   Property    Property                            
            Daniel Gallagher     $250      7%      8%     $ 65,500      -0-                              
            William Bingston      500     20%     23%      337,800      -0-                              
            George Coward         500     12%     14%      165,200      -0-                              
            John D. Gaskins       500     --      --       222,800      -0-                              
            Bobby D. Chiles       500     --      --       267,520      -0-                              
            Alonzo Corwin         500     15%     18%      144,200    78,600                             
            W. Jay Hoyt III       100     15%     --         --         --                               
            Totals            2,850                    1,203,020    78,600                               
            Petitioner's sharing ratios were reported incorrectly on the                                 
            Schedule K-1 for 1978.  As of December 31, 1978, petitioner's                                
            correct share of partnership capital was 18.182 percent.                                     
                  Petitioners claimed investment tax credit basis for new                                
            property with a life of 7 or more years in the amount of $165,200                            




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