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II. Fees Paid
Corbin West paid CDC substantial fees related to the
property. These fees included the following: (1) An
"acquisition fee" of $157,500, (2) a "developer's fee" of
$87,213, (3) a "tax credit guarantee fee" of $90,000, and (4) a
"no negative cash flow guarantee fee" of $53,000.
Corbin West paid CDC the "tax credit guarantee fee" for
CDC's guaranty that the property would be operated in a manner
which would comply with the requirements of section 42 and ensure
the availability of a low-income housing tax credit. CDC
guaranteed that if the property failed to qualify for the low-
income housing tax credit, then CDC would advance Corbin West an
amount equal to any loss of credit. To date, CDC has not made
any payments under this provision.
Corbin West paid CDC the "no negative cash flow guarantee
fee" for CDC's promise to make loans up to $250,000 to Corbin
West to fund any operating deficits that might arise through
December 31, 1995.
On its Federal income tax returns for 1990, 1991, 1992, and
1993, Corbin West included the "acquisition fee", the "developers
fee", and the "tax credit guarantee fee" in the property's basis.
On these returns, Corbin West capitalized the "no negative cash
flow guarantee fee" and claimed amortization deductions related
to that fee of $7,571, $7,571, $7,571, and $7,574, respectively.
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