- 40 -
respectively; and for purposes of allocating tax preference
items to its partners, EA 83-XII reported qualified
investment income of $303,571 and $330,529, respectively,
and qualified investment expenses of $908,960 and $909,831,
respectively.
For depreciation purposes, EA 83-XII treated the
aggregate contract price of its 51 properties, $3,901,295,
less the aggregate rental deficit contribution, $655,319,
as its aggregate basis in the real estate; viz $3,245,976.
EA 83-XII allocated 20 percent of that amount to land;
viz $649,195, and 80 percent to buildings; viz $2,596,781.
EA 83-XII depreciated the latter amount on a straight-line
basis over 15 years and claimed depreciation of $173,119
in each of the years in issue.
For each of the years in issue, EA 83-XII was
obligated under the promissory notes that it had issued
to EMI to pay interest on the aggregate principal amount
of the notes, $3,706,150, at the annual rate of 14.375
percent. Thus, EA 83-XII was obligated to pay interest to
EMI in the aggregate amount of $532,759 during each of the
years in issue (i.e., $3,706,150 x 14.375 percent).
EA 83-XII was also obligated under the 83 partnership
agreement to pay interest at the annual rate of 15 percent
to compensate the general partner for unsecured advances of
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