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On February 17, 1987, Mr. Bach assigned his interest in
Diamond Farms to Mr. Goldstein. On Schedule K-1 attached to
petitioners' 1987 return, Mr. Bach reported his distributive
share of loss from Diamond Farms in the amount of $1,751.
Petitioners' Schedule K-1 also reflects capital contributed
during 1987 in the amount of $66,823, which represented Mr.
Bach's total deficit capital account assumed by Mr. Goldstein as
of the date of transfer. Petitioners did not report any gain
from the assignment of Mr. Bach's partnership interest in Diamond
Farms on their 1987 Federal income tax return.
As of December 31, 1986, Mr. Bach was a general and limited
partner of the Wazee Street Limited Partnership (Wazee Street).
Mr. Bach owned a 1.44-percent profit, loss, and ownership of a
capital share as a general partner and a 14.08-percent share of
profits and losses as a limited partner.
As of December 31, 1986, Mr. Bach had a deficit balance in
his Wazee Street general and limited partner's capital accounts
of $3,661 and $35,771, respectively. Mr. Bach had allocable
general and limited partner's shares of nonrecourse partnership
debt of $14,228 and $139,120, respectively.
During 1987, the property owned by Wazee Street was
foreclosed upon and sold. Wazee Street had outstanding debt as
of the date of foreclosure of $1,227,454. Mr. Bach's allocable
share of the partnership debt at the time of foreclosure was
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