St. Charles Investment Co., Burton C. Boothby, Tax Matters Person - Page 3

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               At the time the petition was filed, Burton C. Boothby                  
          (petitioner) resided in Denver, Colorado, and St. Charles                   
          Investment Company (St. Charles) had its principal place of                 
          business in Englewood, Colorado.  St. Charles filed its 1991 U.S.           
          Income Tax Return as an S corporation with the Internal Revenue             
          Service at Odgen, Utah.                                                     
               Prior to 1991, St. Charles was a closely held C corporation            
          as defined under section 469(j)(1).  St. Charles operated rental            
          real estate giving rise to PAL's under section 469 in 1988, 1989,           
          and 1990.  St. Charles elected S corporation status effective               
          January 1, 1991.  Immediately prior to the effective date of the            
          S corporation election, St. Charles had suspended PAL's from its            
          real estate activities.                                                     
               During 1991, St. Charles disposed of certain of the rental             
          properties (the properties).  St. Charles reported the sales of             
          the properties and deducted the suspended PAL's arising from the            
          properties on its 1991 S corporation tax return.  Six of the                
          seven properties sold produced losses of $9,237,752; the seventh            
          produced a gain of $6,161.                                                  
               A portion of the suspended PAL's was attributable to                   
          depreciation for which St. Charles had adjusted the bases of the            
          properties.  St. Charles used these adjusted bases in calculating           
          its gain or loss from the sales of the properties.                          

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