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The attached unexecuted Mortgage Deed listed Farm & Grove as
the mortgagor (debtor) and petitioner as mortgagee (lender). The
Mortgage Deed, which was not executed, also provided as follows:
Random releases for each parcel encumbered herein shall
be given at any time upon payment of $3,300.00
principal [p]lus accrued interest upon such amount.
All regular paymenbts [sic] and prepayments of
principal shall be credited towards such releases.
The note provided the following terms:
FOR VALUE RECEIVED the undersigned promises to pay to
the order of Edward C. Tietig the principal sum of One
hundred seventy-four thousand nine hundred Dollars
($174,900) together with interest thereon from March 1,
1991 at the rate of 8.9% per cent, per ANNUM until
maturity, said interest being payable monthly on the
1st day of March, 1991 and payment both principal and
interest being payable in lawful money of the United
States or its equivalent to Farm & Grove Realty. * * *
Payments of principal and interest of $1,393.95 on the
first (1st) day of April, 1991, and on the first (1st)
day of each month thereafter until the first (1st) day
of March 2021, when the entire remaining balance will
become due and payable.
This Note may be prepaid in whole or in part, at any
time, without penalty.
As a result of the transaction, Farm & Grove held only the
legal title to the lots, as trustee for the Kiddies 38/91
partnership. Farm & Grove did not report any gain from the sale
of the equitable interest in the 53 lots to the partnership on
its 1990 Form 1120S.
The Kiddies 38/91 partnership appears to have been solvent
in 1990 and 1991. On Schedule L, Balance Sheets, of its 1991
Form 1065, U.S. Partnership Return of Income, the partnership
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