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the rollback taxes. SLR paid the following rollback taxes in
1990:
Amount Taxing Authority
$137,233.69 City of Coppell, Texas
146,617.41 Coppell Independent School District
53,284.14 Municipal Utility District
10,746.88 Dallas County Assessor
16,694.58 Dallas County Assessor
364,576.70 Total
As reflected on the Schedules K-1 attached to and made a
part of SLR's 1990 return, SLR distributed the following tax
deductions to its partners as "Other Deductions":
Investment Expenses - Professional fees $ 2,830
Investment Expenses - Ad valorem taxes 419,580
Total 422,410
Of the $419,580 reported as ad valorem taxes, $364,576.70
represents the rollback taxes, and petitioner agrees that the
$55,003.30 balance represents an ad valorem tax for which SLR
would have been liable regardless of the sale. Of the $2,830
deducted as professional fees, $2,500 represents an attorney's
fees liability incurred in connection with the determination of
the rollback taxes.
Discussion
This case presents an issue, among other things, under the
passive loss rules of section 469, and more specifically the
provisions of section 469(e)(1)(A), which provides:
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