Sandy Lake Road Limited Partnership, J. Steve Anderson III, Tax Matters Partner - Page 6

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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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