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Robert,
Would you please take a few minutes to give me your advices about my tax disputes between my partnership and me (as a partner)as following:
In 1993, I bought a total of 5 units of the NFDA partnership. After they completed the sell of about 5,063 units through the promoters and Digital Mobil Incorporation, they have to file the law suit to against the promoters and DMI because they claimed that the promoters and DMI did not transfer the assets to the partnership as in the initial agreement signed by them. Until today as I am writing this message to you, they still proceed with the law suit. The partnership have not produced any profits yet except for the interest income of $560,719 for the year ended December 31, 1995 and $639,483 for the period ended June 24, 1994 (inception) through December 31, 1995 as prepared by Janet Loss, C.P.A., P.C.
Every year the partnership sends the Schedule K-1 (form 1065) to every partners. The problem is I never received a penny earning from the partnership since I became the partner. My initial cost for this (real bad) investment was $20000. On the 1997 Schedule K-1 shows the (a)Capital account at beginning of year is 5,910, (b)the Capital contributed during year is 4,930 and (c)the Partner's share of lines 3,4, and 7, form 1065, schedule M-2 is 687. Adds these (a),(b),and (c), enter the result in (e) Capital account at end of year is 11,527. 4. The portfolio income(loss):
A. Interest .................................... 1,433.
10. Deductions related to portfolio income ...... 757.
Mr. Green, my capital account at end of year is 11,5127 compared to my initial cost of investment was 20000. IMO, it is no make sense that I have to pay the income interest 1,433 as reported to IRS by the partnership. What does it make sense if I continue to pay this stupid portfolio interest for ten or fifteen years, and assume that I had to pay tax on a total of $10,000 of the portfolio income interest before this partnership files the bankruptcy, does the IRS allow me to claim the loss of 20,000.00 plus all the portfolio interest incomes that I filed with the IRS every year (???maybe plus the interests on $10,000 in ten years) ?
Please give some of your advices how to deal with this ugly tax problem. I appreciate for your time and your kindness help me out this problem.
Best regards,
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