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Effective January 1, 1986, a new Gateway Corp./Essex
agreement reduced Essex's share of Gateway Corp.'s fees from the
operations of the Gateway Hotel and the Midland Hotel from 75
percent to 40 percent.
Although Eulich-Management was sold by Eulich to an
unrelated company called Aircoa in 1986, Eulich-Management
continued to participate as a partner in Essex until about 1990.
In early 1990, Gateway Corp. lost the management contracts
on the Gateway and Midland hotels and ceased operating. The
Essex partnership terminated by 1991.
During the years 1982 through 1988, Essex reported the
following amounts as received and/or accrued22 commission fee
payments from Gateway Corp. and Eulich-Management:
Year Gateway Eulich-Mgt.
1982 $234,170 $104,121
1983 222,557 235,718
1984 268,663 242,116
1985 225,487 230,847
1986 68,000 123,089
1987 172,963 388,632
1988 142,761 238,889
Total 1,334,601 1,563,412
(...continued)
would lose following the expected termination of Eulich-
Management's management contract for the Allentown Hilton, as the
Allentown Hilton was then in the process of being sold.
22
Essex reported its income on the cash method until 1987.
For the 1987 taxable year and thereafter Essex reported on the
accrual method.
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