EXHIBIT 8.1
JULIA KATHERINE SWISHER, JD, LL.M, CPA
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February 19, 2003
ABIC Realty Corporation DRAFT FORM OF
General Partner TAX OPINION
ABIC Realty Fund I, L.P.
9520 North May Avenue
Oklahoma City, OK 73120
Dear Ladies and Gentlemen:
You have requested my opinion regarding the treatment of various
federal income tax issues arising from the offering and sale of Units of limited
partnership interest of ABIC Realty Fund I, L.P., a Texas limited partnership
(the "Partnership"). The General Partner, ABIC Realty Corporation (the "General
Partner") and the Partnership are described in the Registration Statement on
Form S-11 filed with the Securities and Exchange Commission on --------- , as
amended (the "Registration Statement") and the Prospectus, as amended, included
therein (the "Prospectus"). Terms capitalized herein shall have the same
definition as set forth in the Prospectus or in the Amended and Restated
Agreement of Limited Partnership of the Partnership included as Exhibit "A" to
the Prospectus.
In rendering my opinion, I have reviewed and relied upon (a) a copy of
the executed Certificate of Limited Partnership of the Partnership filed with
the Secretary of State of the State of Texas on May 17, 2002; (b) the limited
partnership agreement of the Partnership (the "Partnership Agreement"); (c) the
Prospectus; and (d) representations of the General Partner set forth herein and
in the Prospectus. Such representations include that the statements and
information set forth in the Prospectus are accurate and complete and that the
Partnership will be operated and managed and will invest in the manner set forth
in the Prospectus and the Partnership Agreement.
In rendering my opinion, I have assumed that all statements and
representations in the Prospectus are accurate and that there are no omissions
of material facts. No independent verification has been made of any such
statements or representations; nor have any independent efforts been made to
determine if there are any omissions of material facts. I have assumed that the
Partnership Agreement will be executed in the form included as Exhibit "A" to
the Prospectus and that the Partnership will be operated and managed and will
invest in accordance with the Partnership Agreement and the Prospectus. Because
the Partnership has not yet acquired any properties or entered into contracts to
acquire any properties, it is impossible to render an opinion based upon
specific facts.
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506 OAKLAND STREET E-MAIL JKSWISHER@AOL.COM (512) 479-6040
AUSTIN, TEXAS 78703 FAX (512) 479-6074
This opinion is based upon my interpretation of the relevant portions
of the Internal Revenue Code of 1986, as amended (the "Code"), Temporary,
Proposed and Final Treasury Regulations promulgated thereunder ("Regulations"),
various administrative rulings and procedures issued by the Internal Revenue
Service ( the "IRS") and judicial decisions. All such authorities are subject to
change, which may or may not be retroactive, by future legislation, additional
actions by the IRS or judicial decisions that change or modify the existing law.
If, in the future, any of the factual assumptions relied upon are
changed or proven to be incorrect, the Code, Regulations or other administrative
rulings and procedures issued by the IRS are amended or otherwise modified or
withdrawn or judicial decisions are issued that are inconsistent with law
existing at the date of this opinion, such events could materially affect the
statements made herein and have adverse effects on the income tax consequences
of investing in the Partnership.
This opinion is strictly subject to all of the terms, conditions and
limitations set forth herein, and all references to this opinion contained in
the Prospectus are expressly qualified by reference to the entirety of this
opinion. This opinion is directed to individual taxpayers who are citizens of
the United States. This opinion is not directed to investors who are not
individuals and who are United States citizens, including, but not limited to,
corporations, partnerships, foreign taxpayers subject to Subchapter N of the
Code, IRAs and any other retirement plans whether or not any such plans are
subject to ERISA. No opinion is given with respect to federal income tax aspects
of the offering which depend upon a Limited Partner's particular circumstances.
This opinion may be relied upon only by Limited Partners who subscribe to this
offering. It does not apply to, nor may it be relied upon by any new Limited
Partner who has been substituted for another Limited Partner or any assignee of
a limited partnership interest. It does not address foreign tax considerations.
Additionally, the opinions expressed herein do not apply to the tax consequences
of any resignation or removal of the General Partner or the operations of the
Partnership for any period following the resignation or removal of the General
Partner.
As set forth in the Prospectus, the General Partner does not anticipate
that the Partnership will be considered a tax shelter as that term is defined in
the Code. My opinion attempts to address each material tax issue that involves a
reasonable possibility of challenge by the IRS. There is no assurance that the
conclusions reached and the opinions expressed herein would not be challenged by
the IRS or sustained by a court if the IRS were to pursue its challenge. This
opinion is not a representation or a guarantee that the tax results opined to
herein or described in the Prospectus will be achieved.
The General Partner does not intend to request a ruling from the IRS as
to any of the issues discussed herein regardless of whether an opinion is given
or whether no opinion can be given.
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February 19, 2003 2
SUMMARY OF OPINIONS:
Subject to all of the qualifications herein and in the Prospectus and
in reliance upon the representations and assumptions set forth herein and in the
Prospectus, I am of the opinion that the following material income tax issues
will have a favorable outcome on the merits if challenged by the IRS and
litigated and decided by a court of law:
(1) The Partnership will be classified as a partnership for federal income tax
purposes and not as an association taxable as a corporation;
(2) The Partnership will not be classified as a "publicly traded partnership"
under Section 7704 of the Code;
(3) A Limited Partner's interest in the Partnership will be treated as a
passive activity;
(4) The activities contemplated by the Partnership will be considered
activities entered into for profit by the Partnership;
(5) The Partnership is not currently required to register as a tax shelter
with the IRS under Section 6111 of the Code prior to the offer and sale of
the Unites based upon the General Partner's representation that the "tax
shelter ratio" with respect to an investment in the Partnership, as
defined in the Code and Regulations, will not exceed 2 to 1 for any
investor as of the close of any year in the Partnership's first five
calendar years; and
(6) Partnership items of income, gain, loss, deduction and credit will be
allocated between the General Partner and the Limited Partners
substantially in accordance with the allocation provisions of the
Partnership Agreement.
(7) The Partnership will not be classified as a "tax shelter" under Section
6662(d) of the Code for purposes of determining certain potential
exemptions from the application of the accuracy-related penalty
provisions.
In addition, I am of the opinion that, in the aggregate, substantially
more than half of the material federal income tax benefits contemplated by the
Prospectus, in terms of
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February 19, 2003 3
their financial impact on a typical individual investor, more likely than not
will be realized by an investor in the Partnership.
It is not possible to form an opinion as to whether the Partnership will
be considered to hold any or all of its properties primarily for sale to
customers in the ordinary course of business if challenged by the IRS, litigated
and judicially decided.
No opinion is given as to the tax consequences to investors at the
individual level with regard to any tax issue that depends upon the specific
facts and circumstances of an individual partner. Such tax consequences include,
but are not limited to, the application of alternative minimum taxes, investment
interest limitations or the application at the partner level or Code Section 183
limitations on losses from activities not entered into for profit.
CLASSIFICATION AS A PARTNERSHIP
Partnerships are not subject to federal, state or local income
taxation. Instead, income, gains, losses, deductions and credits are passed
through to partners and reported on the partners' individual tax returns and
distributions of cash are taxable only to the extent that the cash exceeds basis
in the partnership interest. On the other hand, corporations and other
associations taxable as corporations are taxable entities subject to federal
income taxation and distributions of cash to owners is treated as a dividend and
not deductible by the distributing entity. The availability of the pass-through
treatment of income, gains, losses, deductions and credits and the avoidance of
taxation at the entity level is dependent upon the Partnership being classified
as a partnership for federal income tax purposes rather than as an association
taxable as a corporation.
Under current Regulations, an entity organized under the limited
partnership statutes of any state will be classified as a partnership unless it
elects to be classified as a corporation or is classified as a publicly traded
partnership as discussed infra. Treas. Reg. 301.7701-2 and Treas. Reg.
301.7701-3. Based upon those Regulations, the good standing as of the date of
this opinion of the Partnership as a limited partnership under Texas law, the
provision of the Partnership Agreement that the General Partner will not elect
to be treated as a corporation and the representation of the General Partner
that it does not intend to elect to be treated as a corporation as well as other
assumptions and representations contained herein and in the Prospectus, I am of
the opinion that the
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February 19, 2003 4
Partnership will not be classified as a partnership for federal income tax
purposes.
STATUS AS A PUBLICLY TRADED PARTNERSHIP
Code Section 7704 provides that even though an entity may be treated as
a partnership under Code Section 7701(a), if that entity is a "publicly traded
partnership", it will nonetheless be classified as a corporation rather than a
partnership for tax purposes. A publicly traded partnership is defined as any
partnership whose interests are traded on an established securities market or
are readily tradable on a secondary market or the substantial equivalent
thereof.
The Regulations under Code Section 7704 define what constitutes an
established securities market and a secondary market or the substantial
equivalent thereof. Treas. Reg. Section 1.7704-1(b) and (c). Those regulations
also set forth what transfers may be disregarded in determining whether such
definitions are satisfied with respect a partnership. For example, transfers
made by gift, as a result of death, between family members and as distributions
from a retirement plan or an IRA are disregarded in determining whether a
partnership is a publicly traded partnership. A transfer or series of transfers
during any thirty calendar days by one partner (or by related parties)
aggregating more than two (2%) percent of the total interests in partnership
capital or profits will be disregarded in determining if a partnership is a
publicly traded partnership. Treas. Reg. Section 1.7704-1(e).
The Regulations also provide that interests in a partnership will not
be considered as traded on an established securities market nor will they be
readily tradable on a secondary market unless either the partnership
participates in the establishment of the market or the inclusion of interests
thereon or the partnership recognizes the transfer made on the market, for
example, by admitting the transferee as a partner or otherwise recognizing any
rights of the transferee. Treas. Reg. Section 1.7704-1(d)
The Regulations also set forth certain safe harbors (the "secondary
market safe harbors") which, after taking into consideration all transfers other
than those deemed disregarded, may be satisfied in order to avoid classification
of such transfers as being made on a secondary market or the substantial
equivalent thereof. Treas. Reg. Section 1.7704-1(j). That secondary market safe
harbor provides that partnership interests will not be readily tradable on a
secondary market or the substantial equivalent thereof if the sum of the
percentage interests in partnership capital or profits transferred during the
taxable year does not exceed two (2%) percent of the total interests in
partnership capital or profits.
The General Partner has represented that the Units will not be traded
nor will they cause the Units to be traded on an established securities market
or a secondary market or the equivalent thereof. The Partnership Agreement
provides that the Units may be transferred only if the transfer meets the
secondary market safe harbor provisions of the
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February 19, 2003 5
Regulations. The General Partner has represented that the Partnership will be
operated strictly in accordance with the Partnership Agreement and that any
transfers of Units that would cause, in the General Partner's opinion, the
Partnership to be treated as a publicly traded partnership under the Code and
Regulations, including but not limited to transfers in excess of two (2%)
percent of total partnership capital or profits, will be void. Accordingly,
based upon the foregoing representations of the General Partner and the
Partnership Agreement, it is my opinion that the partnership will not be
classified as a publicly traded partnership.
If, however, the Partnership were classified as a publicly traded
partnership, Code Section 7704(c) provides an exception to treatment as a
corporation if ninety (90%) percent of more of the gross income of the
Partnership for each taxable year consists of "qualifying income." Qualifying
income includes interest, real property rents and gain from the sale or other
disposition of real property. Qualifying income does not include income from the
rental or lease of personal property or real property rents which are contingent
on the profits of the lessees. The Prospectus states the Partnership will
purchase and operate income producing real estate properties. Until Proceeds of
the Offering are invested in real estate they may earn interest. The General
Partners have represented that they intend to operate the Partnership in a
manner that will insure that more than ninety (90%) percent of the gross income
will be interest, real property rents that are not contingent on the profits of
the lessees and gain from the sale of real property. Accordingly, even if the
Partnership were deemed to be a publicly traded partnership, if the Partnership
is operated in accordance with the Prospectus and the General Partner's
representations, the qualifying income exception will be satisfied and the
Partnership will not be treated as a corporation for tax purposes. However, in
the event that the Partnership is deemed a publicly traded partnership but meets
the requirements of the qualifying income exception, the Partnership's income
will be reclassified from passive income to portfolio income as discussed infra.
If the Partnership is treated as a partnership for federal income tax
purposes, the Partnership will not be a taxable entity subject to federal income
tax. Each Partner will be required to report on his individual tax return for
each year his distributive share of the Partnership's items of income, gain,
loss, deduction or credit regardless of whether any cash distributions are
actually made. The remaining summary of federal tax consequences in this opinion
assumes that the Partnership will be classified as a partnership for tax
purposes.
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PASSIVE LOSS LIMITATIONS
Individuals may deduct "passive losses" only to the extent of "passive
income". Code Section 469. Passive losses and passive income are losses and
income derived from "passive activities." Passive activities include any
activity involving the conduct of a trade or business in which the taxpayer does
not materially participate, such as a limited partner, and certain rental
activities. Code Section 469(c). It is my opinion that an investment in Units
will be a passive activity. As such, income and loss from the Partnership other
than interest earned on temporary investments and working capital reserves will
constitute passive income and loss.
Generally, losses from passive activities are deductible only to the
extent of a taxpayer's income or gains from passive activities. Accordingly, any
losses from the Partnership will not be available to reduce salary and other
personal services income, income from businesses in which the Limited Partner is
an active participant, and "portfolio income". Portfolio income includes
non-business income from dividends, interest, royalties, annuities and gains
from the sale of property held for investment. Code Section 469(e).
In the event that losses from the Partnership exceed a Limited
Partner's passive income from all sources and the loss is not allowed, the loss
will be suspended and carried forward indefinitely and allowed in subsequent
years as an offset against future
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years passive income from any source. Code Section 469(f). Upon a taxable
disposition of a taxpayer's entire interest in a passive activity to an
unrelated party, suspended losses with respect to that activity will then be
allowed as a deduction against any remaining income or gain from that activity
including gain recognized from the disposition; and then against any net income
or gain for the taxable year from other passive activities; and, finally, any
other non-passive income or gain. Code Section 469(g). It should be noted that
all of the Partnership Properties will be aggregated into a single "activity"
for purposes of these rules so that the disposition of one Partnership Property
(other than in liquidation of the Partnership) will not be considered a
disposition of the entire interest in the passive activity. Accordingly,
suspended passive losses attributable to that disposed of Partnership Property
will not be separately deducted. Temp. Reg. Section 1.469-4T(k)(2)(ii).
In the case of partnerships that are deemed to be publicly traded
partnerships, the Code provides that the passive activity loss rules are applied
separately with respect to items attributable to a publicly traded partnership.
Code Section 469(k). Accordingly, if the Partnership were deemed to be a
publicly traded partnership, Partnership losses, if any, would be available only
to offset future non-portfolio income of the Partnership. H.R. Rep. No. 495,
100th Cong., 1st Sess. 951, reprinted in 1987 U.S. Code Cong. & Ad. News
2313-1697. In addition, if the Partnership were deemed to be a publicly traded
partnership which is not treated as a corporation because of the qualifying
income exception, Partnership income would be treated as portfolio income rather
than passive income. Id.
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February 19, 2003 8
ALLOCATION OF PROFIT AND LOSS.
Generally, partnership items of income, gain, loss, deduction and
credit are allocated among partners as set forth in the relevant partnership
agreement pursuant to Code Section 704(a). Section 704(b) provides, however,
that if an allocation does not have substantial economic effect, such allocation
will instead be made in accordance with the partner's interest in the
partnership as determined by taking into account all facts and circumstances.
Regulations under Section 704(b) of the Code (the "Section 704(b)
Regulations") provide complex rules for determining (i) whether allocations will
be deemed to have economic effect; (ii) whether the economic effect of
allocations will be deemed to be substantial; (iii) and whether allocations not
having substantial economic effect will be deemed to be made in accordance with
a partner's interest in the partnership.
The Section 704(b) Regulations provide generally that an allocation
will be considered to have economic effect if: (i) partners' capital accounts
are determined and maintained in accordance with the Section 704(b) Regulations;
(ii) upon the liquidation of the partnership, liquidating distributions are made
in accordance with the positive capital account balances of the partners after
taking into account all capital account adjustments for the year during which
such liquidation occurs; and (iii) the partnership agreement contains a
"qualified income offset" provision and the allocation in question does not
cause or increase a deficit balance in a partner's capital account at the end of
the partnership's taxable year.
The Partnership Agreement contains a "qualified income offset" if it
provides that a partner who unexpectedly receives an adjustment, allocation or
distribution of certain items which causes a deficit or negative capital account
balance (which means generally that the sum of losses allocated and cash
distributed to a partner exceeds the sum of his capital contributions to the
partnership and any income allocated to such partner) will be allocated items of
income and gain in an amount and manner sufficient to eliminate the deficit
balance as quickly as possible.
Even if the allocations of profits and losses of a partnership are
deemed to have economic effect under the Section 704(b) Regulations, however, an
allocation will not be upheld unless the economic effect of such allocation, is
"substantial." In this regard, the Section 704(b) Regulations generally provide
that the economic effect of an allocation is "substantial" if there is a
reasonable possibility that the allocation will affect the dollar amounts to be
received by partners from a partnership, independent of tax consequences. The
economic effect of an allocation is presumed not to be substantial if there is a
strong likelihood that the net adjustments to the partner's capital account for
any taxable year will not differ substantially from the net adjustments which
would have been made for such year in the absence of such allocation and the
total tax liability of the partners for such year is less than it would have
been in the absence of such allocations. The economic effect will also be
presumed not to be substantial where: (i) the partnership agreement provides for
the possibility that the allocation will be largely offset by one or
Draft of Tax Opinion
February 19, 2003 9
more other allocations; (ii) the net adjustments to the partners' capital
accounts for the taxable years to which the allocations relate will not differ
substantially from the net adjustments which would have been recorded in such
partners' respective capital accounts for such years if the original allocations
and the offsetting allocations were not contained in the partnership agreement;
and (iii) the total tax liability of the partners for such year is less than it
would have been in the absence of such allocations.
With respect to the foregoing provision, the Section 704(b) Regulations
state that original allocations and offsetting allocations will not be deemed to
not be substantial if, at the time the allocations become part of the
partnership agreement, there is a strong likelihood that the offsetting
allocations will not, in large part, be made within five years after the
original allocations are made. The Section 704(b) Regulations further state that
for purposes of testing substantiality, the adjusted tax basis of partnership
property will be presumed to be the fair market value of such property, and
adjustments to the adjusted tax basis of partnership property (such as
depreciation or cost recovery deductions) will be presumed to be matched by
corresponding changes in the property's fair market value.
If the allocations of profits and losses set forth in a partnership
agreement are deemed not to have substantial economic effect, the allocations
are then to be made in accordance with the partners' interests in the
partnership as determined by taking into account all facts and circumstances.
The Section 704(b) Regulations provide in this regard that a partner's interest
in a partnership will be determined by taking into account all facts and
circumstances relating to the economic arrangement of the partners, including:
(i) the partners' relative contributions to the partnership; (ii) the interests
of the partners in economic profits and losses (if different from those in
taxable income or loss); (iii) the interests of the partners in cash flow and
other nonliquidating distributions; and (iv) the rights of the partners to
distributions of capital upon liquidation.
The Partnership Agreement: (i) provides for the determination and
maintenance of Capital Accounts in accordance with the Section 704(b)
Regulations; (ii) provides that liquidation proceeds will be distributed to the
Partners in accordance with Capital Accounts, and (iii) contains a qualified
income offset provision. Accordingly, it is my opinion that Partnership items of
income, gain, loss, deduction and credit will be allocated among the General
Partner and the Limited Partners substantially in accordance with the allocation
provisions of the Partnership Agreement if that matter were challenged by the
IRS, litigated and judicially decided.
ACTIVITIES NOT ENGAGED IN FOR PROFIT
Section 183 of the Code provides for the disallowance of deductions
attributable to activities "not engaged in for profit." The term "not engaged in
for profit," is defined as any activity other than an activity that constitutes
a trade or business or an activity that is engaged in for the production or
collection of income. In general, an activity will be
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February 19, 2003 10
considered as entered into for profit where there is a reasonable expectation of
profit in the future. The determination of whether an activity is engaged in for
profit is based upon the facts and circumstances of each case.
Based upon the investment objectives of the Partnership and the
representation of the General Partner that the Partnership will be operated in a
business-like manner in all material respects and in strict accordance with the
Partnership Agreement and this Prospectus, and assuming the determination as to
whether the activities of the Partnership are activities entered into for profit
under Code Section 183 is made at the partnership level, it is my opinion that
the activities contemplated by the Partnership will be considered activities
entered into for profit by the Partnership, if such issue were challenged by the
IRS, litigated and judicially decided.
However, since the test of whether an activity is deemed to be engaged
in for profit is based upon facts and circumstances that exist from time to
time, no opinion can be given that Section 183 of the Code may not be applied in
the future to disallow deductions allocable to Limited Partners from Partnership
operations if my underlying assumptions change. Additionally, no opinion is
given with respect to the application of Code Section 183 at the partner level.
TAX SHELTER REGISTRATION
Any entity deemed to be a "tax shelter," as defined in Section 6111 of
the Code, is required to register with the IRS. Regulations under Section 6111
define a "tax shelter" as an investment in connection with which an investor can
reasonably infer from the representations made that the "tax shelter ratio" may
be greater than 2 to 1 as of the close of any of the first five years ending
after the date in which the investment is offered for sale. The "tax shelter
ratio" is generally determined by dividing the investor's share of the aggregate
deductions derived from the investment, determined without regard to income or
passive loss limitations, by the amount of the investor's capital contributions.
The Partnership is not intended to constitute a "tax shelter." Further,
the General Partner has represented that, in the absence of events which are
unlikely to occur, the aggregate amount of deductions derived from any Limited
Partner's investment in the Partnership, determined without regard to income,
will not exceed twice the amount of any such Limited Partner's investment in the
Partnership as of the close of any year in the Partnership's first five calendar
years. There have been no representations in the Prospectus that are
inconsistent with the General Partner's representations regarding the
anticipated level of deductions.
Based upon the authority of the Regulations under Section 6111 and the
representations of the General Partner that, in the absence of events which are
unlikely to occur, the "tax shelter ratio" with respect to an investment in the
Partnership will not exceed 2 to 1 for any investor as of the close of any year
in the Partnership's first five calendar years, it is my opinion that the
Partnership is not
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currently required to register as a tax shelter with the IRS under Section 6111
of the Code prior to the offer and sale of the Units.
CLASSIFICATION AS "TAX SHELTER" FOR IMPOSITION OF PENALTIES
Under Section 6662 of the Code, a twenty (20%) percent penalty is
imposed on any portion of an underpayment of tax attributable to a "substantial
understatement of income tax." In general, a "substantial understatement of
income tax" will exist if the actual income tax liability of the taxpayer
exceeds the income tax liability shown on his return by the greater of 10% of
the actual income tax liability or $5,000. Unless the understatement is
attributable to a "tax shelter," the amount of an understatement is reduced by
any portion of such understatement which is attributable to (i) the income tax
treatment of any item shown on the return if there is "substantial authority"
for the taxpayer's treatment of such item on his return or (ii) any item with
respect to which the taxpayer adequately discloses on his return the relevant
facts affecting the item's income tax treatment. In the case of a "tax shelter,"
which is defined in Section 6662 of the Code as a partnership or other entity
that has as its principal purpose the avoidance or evasion of federal income
tax, this reduction in the understatement only will apply in cases where, in
addition to having "substantial authority" for treatment of the item in
question, the taxpayer reasonably believed that the income tax treatment of that
item was more likely than not the proper treatment.
In addition to the substantial understatement penalty, Section 6662 of the Code
also imposes a 20 % penalty on any portion of an underpayment of tax (i)
attributable to any substantial valuation misstatement (generally where the
value or adjusted basis of a property claimed on a return is 200% or more of the
correct value or adjusted basis), or (ii) attributable to negligence, defined as
any failure to make a reasonable attempt to comply with the Code, or a careless,
reckless or intentional disregard of federal income tax rules or regulations.
The Regulations under Code Section 6662 provide that an entity will be
deemed to be a tax shelter if the tax avoidance or evasion in motive exceeds all
other motives. Based on the investment objectives of the Partnership, it is my
opinion that the Partnership will not be considered a "tax shelter" for purposes
of Code Section 6662 if challenged by the IRS, litigated and judicially decided.
PROPERTY HELD PRIMARILY FOR SALE
The Partnership has been organized for the purpose of acquiring real
estate for investment and rental purposes. However, if the Partnership were at
any time deemed for tax purposes to be a "dealer" in real property (one who
holds real estate primarily for sale to customers in the ordinary course of
business), any gain recognized upon a sale of such real property would be
taxable as ordinary income, rather than as capital gain, and would constitute
UBTI to Limited Partners which are tax-exempt entities.
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Under existing law, whether property is or was held primarily for sale
to customers in the ordinary course of business, must be determined from all the
facts and circumstances surrounding the particular property and sale in
question. The Partnership intends to acquire real estate and construct
improvements thereon for investment and rental only and to engage in the
business of owning and operating such improvements. The Partnership will make
sales thereof only as, in the opinion of the General Partner, are consistent
with the Partnership's investment objectives. Although the General Partner does
not anticipate that the Partnership will be treated as a dealer with respect to
any of its properties, there is no assurance that the IRS will not take a
contrary position. Because the issue is dependent upon facts which will not be
known until the time a property is sold or held for sale and due to the lack of
judicial authority in this area, it is impossible to render an opinion as to
whether the Partnership will be considered to hold any or all of its properties
primarily for sale to customers in the ordinary course of business.
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I have no obligation to update the opinions expressed herein at any
time after the date hereof. This opinion is prepared solely for your use in
connection with the filing of the Registration Statement and the use of
individuals who become Limited Partners of the
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Partnership and should not be quoted in whole or in part or otherwise referred
to, nor filed with or furnished to any other governmental agency or other person
or entity without my prior written opinion.
Consent is hereby given to the filing of this opinion as an exhibit to
the Registration Statement and to the reference to my firm under the captions
"Legal Opinions" and "Federal Income Tax Consequences" in the Prospectus
concerning this opinion. In giving this consent, I do not admit that I am an
"expert" within the meaning of the Securities Act of 1933, as amended, or that I
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules or regulations of the
Securities and Exchange Commission promulgated thereunder.
I have no obligation to advise you of any changes in my opinions
subsequent to the delivery of this opinion letter, nor do I undertake to update
this opinion letter. My opinion is based solely on the documents I have examined
and the representations made to me . If any facts contained in such documents is
or later becomes inaccurate or if any of the representations made to me are or
later become inaccurate, my opinions will not be able to be relied upon.
Very truly yours,
Julia Katherine Swisher
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