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For tax purposes: (1) HPD was a C corporation and reported
its income employing the accrual method of accounting, and (2) HPD-
Latigo was an S corporation and reported its income employing the
cash method of accounting.
HPD-Latigo had no personnel on its payroll.
Limited Partnership
Malibu Cedars, Ltd. (Malibu Cedars), is a California limited
partnership formed in 1987 to acquire foreclosed rental property
located in the Latigo Beach area of Malibu, California, and to
convert that property (consisting of 104 apartments) into
condominiums (hereinafter the conversion is sometimes referred to
as the project or the Malibu Cedars project). Partnership
interests in Malibu Cedars were held as follows:
General Partners
HPD-Latigo 25-percent interest
Khodor I. Saab 25-percent interest
Limited Partner
Cambridge Financial, Inc. 50-percent interest
In connection with the project, in July 1987, Malibu Cedars
entered into an Agreement for Services (Agreement) with Plaza-HPD,
a joint venture composed of Plaza Development, Inc. (Plaza) and
HPD. Plaza was owned 50 percent by Mr. Saab and 50 percent by
Joseph Ghadir.
The Agreement obligated Plaza-HPD to: (1) Manage, operate,
maintain, lease, and rent to others the project property until such
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Last modified: May 25, 2011