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this purpose was required by HUD. As of the valuation date, GMA
held no real estate or other fixed assets and served only as a
management company for the housing partnerships to oversee
leasing, maintenance, and repair in compliance with HUD
requirements. GMA received a management fee from each of the
housing partnerships equal to 10 percent of rental income.
On the Federal estate tax return, decedent’s interests in
the five partnerships were reported at a fair market value of
$10,000 each. At the time of decedent’s death, the partnership
agreement for each housing project contained a provision granting
Fred Jr., or his personal representatives, heirs or assigns, the
option to purchase decedent’s interest in said partnership for
the sum of $10,000.1 This option provision was contained in each
of the original partnership agreements. On December 31, 1990,
Fred Jr. exercised these options to purchase decedent’s interests
in the four housing partnerships for the payment of the option
price of $10,000 for each partnership interest, or $40,000. On
1 Sec. 5.02 of each partnership agreement provides:
Notwithstanding any of the foregoing,
Fred D. Godley, or his personal
representative, heirs or assigns, shall have
the option to purchase the Partnership
interest of F.O. Godley from either F.O.
Godley or his personal representative, heirs
or assigns, for the sum of Ten Thousand
$10,000. This option may be exercised at any
time during the existence of the Partnership.
Fred D. Godley shall notify all other
Partners in writing of his intention to
exercise this option to purchase.
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Last modified: May 25, 2011