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99-percent partnership interests in CC&F Vacant Land Associates I
(Vacant Land I), CC&F Vacant Land Associates II (Vacant Land II),
CC&F Vacant Land Associates III (Vacant Land III), CC&F Vacant
Land Associates IV (Vacant Land IV), and CC&F Vacant Land
Associates V (Vacant Land V); and 100 percent of the outstanding
stock of CC&F Stadium Properties, Inc. (Stadium). The sale
occurred in two phases, the first on March 28, 1990, and the
second on April 26, 1990. The agreement with the third-party
purchaser required that the underlying property of each
partnership be free and clear of all debt following the closing.
Thus, a portion of the proceeds paid into escrow was applied to
pay off all debt at the closing of the sale.
On October 15, 1991, petitioner timely filed for Western a
Form 1065, U.S. Partnership Return of Income, for 1990.
Petitioner incorrectly reported a section 1231 loss of $3,196,339
from the sale of the partnership interests. The sale of Stadium
stock was listed separately. The reported loss from the sale of
the partnership interests was based on a reported amount realized
of $27,965,551 and basis of $31,161,890. However, the sale
actually resulted in an aggregate net gain of $9,182,216.
The partnerships that were sold by Western also filed tax
returns for 1990. Except for Bellevue, each partnership that was
conveyed included a statement with its return as follows:
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Last modified: May 25, 2011