Note 5 - Income Taxes

12 Months Ended

Dec. 31, 2013

Notes

Note 5 - Income Taxes

Note 5 - Income Taxes

The Partnership is not taxed on its income. The partners are taxed in their individual capacities based upon their distributive share of the Partnership's taxable income or loss and are allowed the benefits to be derived from off-setting their distributive share of the tax losses against taxable income from other sources subject to passive loss limitations. The taxable income or loss differs from amounts included in the statements of operations because different methods are used in determining the losses of the Local Partnerships as discussed below. The taxable income or loss is allocated to the partner groups in accordance with Section 704(b) of the Internal Revenue Code and therefore is not necessarily proportionate to the interest percentage owned.

A reconciliation between the Partnership’s reported net income and the net income (loss) per tax return follows (in thousands, except per limited partnership interest):
	Years Ended December 31,
	2013	2012
Net income (loss) per financial statements	(1,633)	$ 3,300
Sale of partnership interest	0	(3,612)
Other	0	(177)
Investment in Local Partnerships	5,068	(289)
Net income (loss) per tax return	$ 3,435	$  (778)
Net income (loss) per limited partnership interest	$ 47.22	$ (53.36)

The following is a reconciliation between the Partnership’s reported amounts and the Federal tax basis of net assets at December 31, 2013 and 2012 (in thousands):
	2013	2012
Net assets as reported	$  7,258	$  8,891
Add (deduct):
Deferred offering costs	9,367	9,367
Investment in Local Partnerships	(8,000)	(13,392)
Other	3,349	3,673
Net assets – Federal tax basis	$ 11,974	$  8,539

The Partnership was subject to a New Jersey tax based upon the number of resident and non-resident limited partners and apportionment of income related to the Partnership’s investment in certain Local Partnerships. For the year ended December 31, 2012 the expense related to this tax is reflected in tax expense in the accompanying statements of operations. During the year ended December 31, 2012, the Partnership paid approximately $66,000 as a required deposit for estimated 2012 New Jersey taxes, which was based on half of the previous year’s taxes. However, the Partnership’s estimate of the actual tax due for 2012 was approximately $12,000.  The remaining balance paid of approximately $54,000 is reflected as another asset on the accompanying balance sheet at December 31, 2013 and 2012. As a result of the sale of Countryside during 2012, the Partnership is no longer subject to pay New Jersey taxes.