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 consolidated statements of operations because different methods are used in determining the losses of the Local Limited 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 is as follows (in thousands, except per limited partnership interest data):

	Years Ended December 31,
	2013	2012
Net income (loss) per financial statements	$ 7,979	$ 13,015
Other	213	458
Gain on sale and assignment of interests in		2,462
Local Limited Partnerships	1,973
Gain on extinguishment of debt	(6,075)	(13,609)
Partnership’s share of Local Limited Partnership	--	7,890
Net income per tax return	$ 4,090	$ 10,216
Net income per limited partnership interest	$269.34	$1,305.32

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

	December 31,
	2013	2012
Net deficit as reported	$ 850	$ (7,129)
Add (deduct):
Deferred offering costs	5,091	5,091
Investment in Local Limited Partnerships	--	(1,797)
Accrued interest	--	5,808
Other	107	(15)
Net asset (deficit) – Federal tax basis	$ 6,048	$ 1,958