Note 4. Income Taxes

12 Months Ended

Dec. 31, 2012

Notes

Note 4. Income Taxes

Note 4.  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 tax 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 loss and the net income (loss) per tax return follows (in thousands, except per limited partnership interest):

	Years Ended December 31,
	2012	2011
Net loss per financial statements	$    (199)	$    (191)
Gain on assignment of limited partnership interest	1,744	1,150
Other	53	72
Partnership's share of Local Partnerships income	317	261
Net income (loss) per tax return	$   1,915	$   1,292
Net income (loss) per limited partnership interest	$  333.80	$  224.52

The following is a reconciliation between the Partnership’s reported amounts and the federal tax basis of net assets and liabilities (in thousands):

	December 31, 2012	December 31, 2011
Net assets as reported	$    102	$    301
Add (deduct):
Investment in Local Partnerships	(5,394)	(7,471)
Deferred offering expenses	3,896	3,896
Other	786	733
Net liabilities – federal tax basis	$   (610)	$ (2,541)