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of $217,619 and $229,131, respectively, and qualified
investment expenses of $872,376 and $997,436, respectively.
For depreciation purposes, EA 84-III treated the
aggregate contract price of its 55 properties, $3,956,700,
less the aggregate rental deficit contributions, $755,287,
as its aggregate basis in the real estate; viz $3,201,413.
EA 84-III allocated 20 percent of that amount to land;
viz $640,283, and 80 percent to buildings; viz $2,561,130.
EA 84-III depreciated the later amount on a straight-line
basis over 15 years and claimed deprecation at the annual
rate of $170,742 in each of the years in issue. EA 84-III
claimed a depreciation allowance for 4 months on its 1983
return, $56,910, and a depreciation allowance for 12 months
on its 1984 and 1985 returns.
For each of the years in issue, EA 84-III was
obligated under the promissory notes that it had issued to
EMI to pay interest on the aggregate principal amount of
the notes, $3,453,450. EA 84-III was obligated to pay
interest at the annual rate of 14.625 percent on the notes
issued to purchase the 15 properties from U.S. Home and was
obligated to pay interest at the annual rate of 14.125
percent on the notes issued to purchase the 40 condominium
units from Pitman & Japhet. Thus, EA 84-III was obligated
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