Ridge L. Harlan and Marjory C. Harlan - Page 6




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               During 1985, Ridge was a partner in two multiple tier                  
          partnerships:  (1) Pacific Real Estate Investors Partnership                
          (hereinafter sometimes referred to as Pacific) and (2) Carlyle              
          Real Estate Limited Partnership-VI (hereinafter sometimes                   
          referred to as Carlyle).                                                    
               Pacific was a partner in at least one other partnership.               
          Pacific’s 1985 information return shows an ordinary loss of                 
          $7,705 from another partnership, identified by name and employer            
          identification number.  The record does not include information             
          as to the amount of the gross income stated on this 2d-tier                 
          partnership’s 1985 information return.                                      
               Carlyle was a partner in several other partnerships.                   
          Carlyle’s 1985 information return shows ordinary income of                  
          $674,791.81 from four other partnerships, each identified by name           
          and employer identification number.  The record does not include            
          information as to the amounts of Carlyle’s shares of the gross              
          incomes stated on these 2d-tier partnerships’ 1985 information              
          returns.                                                                    
               On one of the schedules attached to their 1985 tax return,             
          the Harlans show their gross income as $1,216,099. This schedule            
          is for purposes of Form 1116, part I, line 2.d.(v), and is an               
          element of the formula used in the computation of their foreign             
          tax credit.  Nevertheless, the parties have stipulated that the             
          gross income for purposes of section 6501(e) that is “reflected             






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