- 5 - “disclaimer” opinions. FmHA raised concerns about BBJ’s failure to maintain the reserve accounts required under the FmHA loan agreement. FmHA refused to waive BBJ’s noncompliance under the loan agreement. In 1989, FmHA began foreclosure proceedings against BBJ for its failure to maintain adequate reserve accounts. In 1994, Yeo and Yeo, P.C., certified public accountants, audited the North Scott Villa Apartments project for years 1992 and 1993. Yeo and Yeo provided a disclaimed opinion based on the following: As discussed in Note 6 to the financial statements, North Scott Villa Apartments is in violation of certain covenants of its loan agreements with the United States Department of Agriculture Farmers Home Administration. The lender has the option to demand immediate payment of the mortgage note. On January 9, 1989, the owners of North Scott Villa Apartments were notified by the Untied [sic] States Department of Agriculture Farmers Home Administration of the acceleration of the mortgage note and immediate payment of the mortgage note. * * * The financial statements do not include any adjustment relating to the recoverability and classification of recorded assets and liability amounts that might be necessary should North Scott Villa Apartments be unable to continue in existence. Petitioner timely filed his 1994 Federal income tax return wherein he reported $64,559 reflecting his pro rata share of partnership loss attributable to a business bad debt. Petitioner claims that the bad debt deduction is attributable to uncollected accounts receivable due from the following entities:Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011