- 19 -
To perform its bookkeeping duties, MSL gave each client an
individual company number in order to keep their books. The LKHP
properties were managed under “company number 50" prior to the
formation of LKHP. From January 1 through June 30, 1997, the
LKHP properties continued to be managed for LKHP under company
number 50. After formation of the partnership, the books
remained the same as before. Gates planned to make journal
adjustments for the partnership for “year-end tax return
purposes”.
5. LKHP’s Federal Tax Returns
For 1997, LKHP filed a Form 1065, U.S. Partnership Return of
Income (1997 return). The 1997 return reported no ordinary
income to LKHP. On LKHP’s Schedule K, Partners’ Shares of
Income, Credits, Deductions, etc., the partnership reported net
income from real estate activities of $93,304, depreciation of
$1,011, and distributions of $100,601. On LKHP’s Schedule K-1,
Partner’s Share of Income, Credits, Deductions, etc., filed for
the amended trust, as a partner, the partnership reported income
from rental activities of $93,257, depreciation of $1,010, and
distributions of $100,601. The amended trust was allocated a
99.95-percent interest in LKHP. The Schedule K-1 filed for
Hillgren reported income from rental activities of $47 and
depreciation of $1. The schedule of activities that was filed
with the 1997 return reported rental real estate income or loss
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011