Corbin West Ltd. Partnership, CDC Equity Corp., Tax Matters Partner - Page 5




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          the property from Norman pursuant to the option with the NBHA for           
          $1,808,500.  Corbin West paid the $1,808,500 by assuming the                
          existing first mortgage of $873,000, obtaining a second mortgage            
          of $920,000, and paying the balance from the limited partners'              
          contributions.  Corbin West also gave the NBHA a promissory note            
          (the note) for $1,341,500 (the difference between the alleged               
          fair market value of $3,150,000 and the amount already paid of              
          $1,808,500).                                                                
               The note was recourse against Corbin West but not against              
          the general partner or any of the limited partners.  The note was           
          not secured by the property.  Interest and principal on the note            
          were not payable until the earlier of the sale of the property or           
          January 1, 2011.  The note was subordinated to repayment of the             
          first and second mortgages, repayment of loans from the general             
          partner plus interest, and repayment of the limited partners'               
          capital contributions and loans plus 8 percent interest.  The               
          NBHA did not record the note as an asset on its financial                   
          statements.                                                                 
               On its Federal income tax returns for 1990, 1991, 1992, and            
          1993, Corbin West included the note in the property's basis for             
          purposes of determining its depreciation deductions and low-                
          income housing credits.  On these returns, Corbin West also                 
          claimed accrued interest deductions related to the note of                  
          $135,000, $147,492, $160,719, and $175,323, respectively.                   





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