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The prepetition items were specifically allocated to Mr. Katz in
his individual capacity, while the postpetition items were
allocated to Mr. Katz’ bankruptcy estate.
A number of partnerships, however, made no attempt to
subdivide the 1990 calendar year distributive share between Mr.
Katz and his bankruptcy estate. Rather, each of these
partnerships issued a Schedule K-1, Partner’s Share of Income,
Credits, Deductions, etc., to Mr. Katz reflecting the entire 1990
calendar year distributive share. With respect to these
partnerships, Mr. Katz undertook an interim closing of the books
on their behalf, allocating the prepetition items to himself and
the postpetition items to his bankruptcy estate. Mr. Katz
explained each such allocation through a Form 8082, Notice of
Inconsistent Treatment or Administrative Adjustment Request
(AAR), attached to his 1990 tax return.
The prepetition items from the 1990 calendar year
distributive shares which were allocated to Mr. Katz in the
manner described above resulted in losses totaling $19,122,838
(the prepetition partnership losses).3 This amount made up most
of the $19,262,795 net operating loss (NOL) Mr. Katz reported for
his 1990 taxable year.
3 The bulk of the prepetition partnership losses was
generated by a partnership entitled Century Centre Associates,
Ltd. This partnership allocated $18,569,842 of overall loss to
Mr. Katz with respect to the period prior to July 5, 1990, while
allocating to Mr. Katz’ bankruptcy estate $33,381,880 of overall
income with respect to the remainder of 1990.
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