Great Plains Gasification Associates, A Partnership, Transco Coal Gas Company, A Partner Other Than The Tax Matters Partner - Page 4

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               The partnership unsuccessfully contested the foreclosure               
          proceedings in litigation which concluded in November 2, 1987,              
          when the U.S. Supreme Court denied the petition for writ of                 
          certiorari.  For Federal income tax purposes, the partnership               
          reported disposing of the project assets as of that date.                   
               By four separate notices of final partnership administrative           
          adjustments (FPAA), respondent took alternative “whipsaw”                   
          positions, determining that the partnership had engaged in a sale           
          or exchange of the plant and related assets as of various dates             
          in 1985, 1986, 1987, and 1988.  Respondent determined that, as of           
          these various alternative dates, the partners must recapture                
          previously claimed investment and energy tax credits, forfeit               
          certain deductions and losses relating to the project, and                  
          recognize gain from disposition of project assets.                          
               The primary issue for decision is whether for Federal income           
          tax purposes the partnership should be treated as disposing of              
          the project assets before November 2, 1987.  We must also decide            
          whether the partnership must take into account the full $1.57               
          billion debt in the year in which the partnership disposed of the           
          project assets pursuant to the foreclosure sale.                            

          of the stock that one partner’s parent company had pledged as               
          security for the loan guarantee.                                            

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