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The Bill Of Sale for the movie “Summer Lovers” was executed
by Filmways on July 14, 1982. SLA executed a $6,540,000 non-
negotiable recourse promissory note to Filmways, and Filmways
issued a receipt for $6,540,000 on the same date.
C. Partnership Tax Return
On its 1982 Form 1065, U.S. Partnership Return of Income,
SLA reported that its business commenced on January 1, 1982. On
Form 4562, Depreciation and Amortization, SLA reported 5-year
property (the film) being placed in service on January 1, 1982.
The property was reported to have a basis of $6.6 million and SLA
took a full year’s depreciation deduction in the amount of
$990,000.
An opinion letter was issued by the law firm of Goldschmidt,
Fredericks & Oshatz as to tax consequences of the formation and
operation of SLA. The opinion letter stated, in part, “The
General Partners have advised that the Partnership will claim a
full year’s depreciation for 1982. * * * [t]he Partnership will
have been in existence for all of 1982, so that it will have a 12
month taxable year”. A report on the projected tax basis and
cash-flow was prepared by the accounting firm of Touche Ross &
Co. on May 23, 1982. In reviewing the depreciation of the film
the report stated, in part, that “The general partners believe
that the Partnership has actively been engaged in business from
January 1, 1982 through the present.”
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Last modified: May 25, 2011