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26, 1993 partnership meeting, the partners decided to direct BEA to
decrease the leverage in Salina’s portfolio in order to reduce the
partnership’s level of risk.
During 1993, Salina earned a gross return of approximately 10
percent under the MAPS strategy. After paying BEA’s fee,
Caraville’s management fee, and other partnership fees, Salina’s
net return was approximately 8 percent.
During 1994, the MAPS strategy was hindered by rising interest
rates. During 1994, Salina had no earnings under the MAPS
strategy.
F. Salina’s Termination and Liquidation
On November 22, 1994, FPL requested that Caraville liquidate
Salina. Accordingly, on November 30, 1994, Salina was liquidated,
and its assets were distributed to its partners. FPL received a
total distribution of $79,888,748, consisting of $63,175,099 in
cash and $16,713,749 in mortgage-backed securities. The record
does not reflect the specific amounts distributed to Caraville and
Pallico or the ultimate disposition of those distributions.
IV. Tax Reporting
A. Salina’s Partnership Returns
In July 1993, Salina filed a U.S. Partnership Income Tax
Return (Form 1065) for the short tax year December 17 to December
27, 1992, reporting investment income of $467,110, investment
expenses of $327,812, and unrealized trading profits of $314,526.
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