<Page>
NY
JANUARY 2, 2004
SUPPLEMENT NO. 1 TO PROSPECTUS FOR
BOSTON CAPITAL TAX CREDIT FUND V L.P.
DATED
JANUARY 2, 2004
(SUPPLEMENT OFFERING BCTC V SERIES 47 AND
IDENTIFYING CERTAIN ANTICIPATED INVESTMENTS)
This Supplement is part of, and should be read in conjunction with, the
Boston Capital Tax Credit Fund V L.P. Prospectus. Capitalized terms used
herein but not defined have the meanings ascribed to them in the Prospectus.
SERIES 47'S PURPOSE
- - To invest in other limited partnerships that will each develop, own and
operate an apartment complex used as low and moderate income housing.
TERMS OF OFFERING
- - Series 47 is offering at least 250,000 ($2.5 million) and up to 3,500,000 ($35
million) Beneficial Assignee Certificates that are the equivalent of limited
partnership interests in Series 47;
- - the price of the certificates is $10 each with a minimum investment of $5,000;
- - this offering will end no later than June 30, 2004; and
- - your money will be held in escrow until at least 250,000 certificates are
sold.
SERIES 47'S INVESTORS WILL RECEIVE
- - federal housing tax credits;
- - tax losses that can offset passive income from any other investments; and
- - profits, if any, from the sale of the apartment complexes.
PRIOR PERFORMANCE OF BOSTON CAPITAL ASSOCIATES V L.L.C
("BOSTON ASSOCIATES") AND ITS AFFILIATES
Boston Capital Tax Credit Fund V L.P. ("Boston Capital") has no prior
performance as Series 47 is its first offering. Affiliates of Boston Capital
have issued other series in other offerings--Series 20 to Series 46. Affiliates
of Boston Capital have issued a total of 83,650,082 certificates, raised
$836,167,910 and admitted 43,612 investors from Series 20 through 46. See "Prior
Performance of Boston Associates and Its Affiliates" in the Prospectus for
information about Series 20 through 46.
INVESTMENT OBJECTIVES AND ACQUISITION POLICIES
Series 47's principal business is to invest, as a limited partner, in other
limited partnerships (the "Operating Partnerships") each of which will develop,
own
1
<Page>
and operate an apartment complex which is expected to qualify for federal
housing tax credits in order to achieve the investment goals set forth in the
Prospectus. The tax credit rules can be complicated and the failure of apartment
complexes to comply with them can result in the loss and/or recapture of tax
credits.
The attainment of Series 47's investment objectives will depend on many factors,
including the ability of Boston Associates to select suitable investments on a
timely basis, the timely completion and successful management of such
investments and future economic conditions in the United States. Accordingly,
there can be no assurance that Series 47 will meet its investment objectives.
ANTICIPATED INVESTMENTS
Series 47 expects to invest in the eighteen Operating Partnerships described
below. Each Operating Partnership will use a significant part of the funds
invested by Series 47 to pay fees to the Operating General Partners. See the
table entitled "Terms of Investment in Operating Partnerships" in this
Supplement.
While Boston Associates believes that Series 47 is reasonably likely to acquire
interests in the apartment complexes described below, it may not be able to do
so. Before any acquisition is made, Boston Associates will complete its due
diligence review as to the Operating Partnership and its apartment complex. This
process will include the review and analysis of information concerning, among
other matters, market competition and environmental factors. If any significant
adverse information is obtained by Boston Associates, either action will be
taken to mitigate the adverse factor(s), or the acquisition will not be made. It
is also possible that the acquisition terms may differ significantly from those
described below. Accordingly, investors should not rely on the ability of Series
47 to invest in these apartment complexes or under the described investment
terms in deciding whether to invest in Series 47. If Series 47 raises the entire
$35 million, the anticipated acquisition of the Operating Partnership interests,
described below, will represent approximately 75.89% of the total money which
Series 47 currently expects to spend on apartment complexes.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Because Series 47 is currently in the offering phase, it has no material assets
or any operating history. Series 47 expects to acquire interests in the
following 18 Operating Partnerships, which will develop, own and operate
apartment complexes, 8 of which are to be newly constructed and 10 of which are
to be rehabilitated. These Operating Partnerships are listed in the anticipated
priority that Boston Capital intends to make investments. If only the minimum of
$2,500,000 is raised, Boston Capital currently intends to invest only in the
Green Manor Partnership and the Sandy Hill Partnership. As stated immediately
above, there is no guarantee that Boston Capital will invest in any of these
Operating Partnerships.
2
<Page>
<Table>
<Caption>
OPERATING GENERAL
PARTNERSHIP PARTNER(S)
--------------------------------- -----------------
1. Green Manor Apartments, L.P. Fieser Development, Inc.
(the "Green Manor Partnership")
Property Rehabilitation
2. Sandy Hill, L.P. Sandy Hill Holdings, LLC
(the "Sandy Hill Partnership")
New Construction
3. Agent Kensington, L.P. FB Enterprises, LLC
(the "Kensington Heights Partnership")
Property Rehabilitation
4. Eastview Family Housing, L.P. Southridge Apts, Inc.
(the "Eastview Partnership")
Property Rehabilitation
5. Brookside Park, L.P. NS Partners, LLC
(the "Brookside Park Partnership")
New Construction
6. Deer Meadow Apartments, L.P. Southridge Apts, Inc.
(the "Deer Meadow Partnership")
New Construction
7. Wagoner Village Apartments, L.P. Green Development
(the "Wagoner Village Partnership")
Property Rehabilitation
8. Gregory Oaks, L.P. Jenkins Properties Limited
(the "Gregory Oaks Partnership") Partnership
Property Rehabilitation
9. Rosehill Apartments, Phase I L.P. Continental Realty, Inc.
(the "Rosehill Partnership")
New Construction
10. Tanglewood Village, L.P. Southridge Apts, Inc.
(the "Tanglewood Partnership")
Property Rehabilitation
11. Elmwood Development, LLC Associated Development
(the "Elmwood Partnership")
New Construction
12. Bayou Bend Apartments, L.P. Fieser Development, Inc.
(the "Bayou Bend Partnership")
Property Rehabilitation
13. Pine Meadow, L.P. Fieser Development, Inc.
(the "Pine Meadow Partnership")
Property Rehabilitation
14. Cedar Cove, L.P. Fieser Development, Inc.
(the "Cedar Cove Partnership")
Property Rehabilitation
15. Willowchase, L.P. Fieser Development, Inc.
(the "Willowchase Partnership")
Property Rehabilitation
16. London Village, L.P. London Village Holdings, LLC
(the "London Village Partnership") Housing Assistance and
New Construction Development Services
17. Clayton Station, L.P. Clayton Station Holdings, LLC
(the "Clayton Station Partnership") Housing Assistance and
New Construction Development Services
18. Pecan Acres L.P. I AAMAGIN 1 Developers LLC
(the "Pecan Acres Partnership")
New Construction
</Table>
None of the Operating General Partners or the management companies are
affiliated with Boston Associates.
3
<Page>
Permanent mortgage loan financing for the apartment complexes will be provided
from a variety of sources. Boston Associates believes that each of the apartment
complexes will have adequate property insurance. The tables included in this
Supplement describe in greater detail information concerning the apartment
complexes and the anticipated terms of investment in each Operating Partnership.
The priority return base for Series 47 is $1.00 per certificate (10%). The
priority return base is the level of return that investors must receive before
Boston Associates may receive a 5% share in the proceeds from the sale or
refinancing of apartment complexes. In establishing the priority return base,
Boston Associates does not represent that Series 47 is expected to provide this
level of return to investors. Boston Associates will receive fees and
compensation for services prior to investors receiving the priority return.
4
<Page>
INFORMATION CONCERNING THE APARTMENT COMPLEXES
<Table>
<Caption>
OPERATING BASIC GOVERNMENT PERMANENT MORTGAGE ANNUAL
PARTNERSHIP LOCATION NUMBER MONTHLY ASSISTANCE MORTGAGE INTEREST RESERVE
NAME OF PROPERTY OF UNITS RENTS(1) ANTICIPATED LOAN RATE AMOUNT
- ------------------------------------------------------------------------------------------------------------------------
1. Bayou Bend Waller, 56 $ 391 1BR RHS Sec. 515; $ 1,424,170; Texas 1%(2) $ 16,800
Partnership Texas $ 452 2BR HOME Investment Home Funds 2.85%
Partnerships $250,000(3)
Program(3)
2. Brookside Park Atlanta, 200 $ 625- Federal Housing MMA Financial 6.40% $ 40,000
Partnership Georgia $ 700 1BR Tax Credits $ 12,000,000(4a)
$ 725-
$ 800 2BR MMA Financial 6.70%
$ 825- $ 400,000(4b)
$ 900 3BR
3. Cedar Cove Sealy, 54 $ 392 1BR RHS Sec. 515; $ 1,399,389; Texas 1%(2) $ 16,200
Partnership Texas $ 445 2BR HOME Investment Home Funds 2%
Partnerships $ 200,000(5)
Program(5)
<Caption>
OPERATING PROPERTY ANNUAL PROPERTY
PARTNERSHIP MANAGEMENT MANAGEMENT
NAME AGENT FEE
- ----------------------------------------------------------
1. Bayou Bend Hamilton Valley 5% of net
Partnership Management rental income
Agent
2. Brookside Park Norsouth 5.07% of net
Partnership Management, rental income
Company
3. Cedar Cove Hamilton Valley 5% of net
Partnership Management rental income
Agent
</Table>
- ----------
(1) Exclusive of utilities, unless indicated otherwise.
(2) Rural Housing Service ("RHS") (formerly Farmers Home Administration) 515
loan with a term of 50 years and a stated interest rate of between 7.5% and
9.5%, written down to an effective rate of 1% through an interest credit
subsidy, and payments of principal and interest on the basis of a 50-year
amortization schedule.
(3) The terms of the Bayou Bend Partnership's anticipated permanent second
mortgage loan in the amount of $250,000 are expected to include a term of 30
years, an interest rate of 2.85% and payments of principal and interest on
the basis of a 30-year amortization schedule.
(4) (a) The terms of the Brookside Park Partnership's anticipated permanent
first mortgage loan in the amount of $12,000,000 are expected to include
a term of 20 years, an interest rate of 6.40% and payments of principal
and interest on the basis of a 40-year amortization schedule.
(b) The terms of the Brookside Park Partnership's anticipated permanent
second mortgage loan in the amount of $400,000 are expected to include a
term of 10 years, an interest rate of 6.70% and payments of principal
and interest on the basis of a 10-year amortization schedule.
(5) The terms of the Cedar Cove Partnership's anticipated permanent second
mortgage loan in the amount of $200,000 are expected to include a term of 30
years, an interest rate of 2% and payments of principal and interest on the
basis of a 30-year amortization schedule.
5
<Page>
<Table>
<Caption>
OPERATING BASIC GOVERNMENT PERMANENT MORTGAGE ANNUAL
PARTNERSHIP LOCATION NUMBER MONTHLY ASSISTANCE MORTGAGE INTEREST RESERVE
NAME OF PROPERTY OF UNITS RENTS(1) ANTICIPATED LOAN RATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
4. Clayton Station Munfordville, 29 $ 310 2BR Federal Housing First Federal/Etown 2% $ 7,250
Partnership Kentucky Tax Credits $ 450,000(6a) 0%
First Federal/Etown
$ 371,200(6b)
5. Deer Meadow Tishomingo, 24 $ 556 1BR RHS Sec. 515 $ 1,000,000 1%(2) $ 14,082
Partnership Oklahoma $ 581 2BR
$ 626 3BR
6. Eastview Watonga, 16 $ 464 2BR RHS Sec. 515 $ 155,100 1%(2) $ 7,800
Partnership Oklahoma $ 484 3BR $ 506,370 1%(2)
7. Elmwood Vanceboro, 24 $ 513- RHS Sec. 515 $ 672,000 1%(2) $ 18,063
Partnership North Carolina $ 577 1BR
$ 622 2BR
8. Green Manor Hempstead, 40 $ 397 1BR RHS Sec. 515; $ 986,713; Texas 1%(2) $ 10,000
Partnership Texas $ 460- HOME Investment Home Funds 3%
$ 550 2BR Partnerships $200,000(7)
Program(7)
<Caption>
OPERATING PROPERTY ANNUAL PROPERTY
PARTNERSHIP MANAGEMENT MANAGEMENT
NAME AGENT FEE
- -------------------------------------------------------------
4. Clayton Station Homeland, Inc. 5% of net
Partnership rental income
5. Deer Meadow Western Property $55 per
Partnership Management occupied unit
per month
6. Eastview Western Property $45 per
Partnership Management occupied unit
per month
7. Elmwood Wynnefield $63 per
Partnership Properties occupied unit
per month
8. Green Manor Hamilton Valley 5% of net
Partnership Management rental income
Agent
</Table>
- ----------
(1) Exclusive of utilities, unless indicated otherwise.
(2) Rural Housing Service ("RHS") (formerly Farmers Home Administration) 515
loan with a term of 50 years and a stated interest rate of between 7.5% and
9.5%, written down to an effective rate of 1% through an interest credit
subsidy, and payments of principal and interest on the basis of a 50-year
amortization schedule.
(6) (a) The terms of the Clayton Station Partnership's anticipated permanent
first mortgage loan in the amount of $450,000 are expected to include a
term of 15 years, an interest rate of 2% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(b) The terms of the Clayton Station Partnership's anticipated permanent
second mortgage loan in the amount of $371,200 are expected to include a
term of 15 years, an interest rate of 0% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(7) The terms of the Green Manor Partnership's anticipated permanent second
mortgage loan in the amount of $200,000 are expected to include a term of 30
years, an interest rate of 3% and payments of principal and interest on the
basis of a 30-year amortization schedule.
6
<Page>
<Table>
<Caption>
OPERATING BASIC GOVERNMENT PERMANENT MORTGAGE ANNUAL
PARTNERSHIP LOCATION NUMBER MONTHLY ASSISTANCE MORTGAGE INTEREST RESERVE
NAME OF PROPERTY OF UNITS RENTS(1) ANTICIPATED LOAN RATE AMOUNT
- --------------------------------------------------------------------------------------------------------------------------------
9. Gregory Oaks Raleigh, 32 $ 386- Federal Housing Community 7% $ 11,200
Partnership North Carolina $ 550 2BR Tax Credits Investment
Corporation of
North Carolina
$ 465,000(8a)
City of Raleigh 2%
$ 700,000(8b)
North Carolina State 0%
Tax Credits
$198,941(8c)
10. Kensington Kansas City 126 $ 567 1BR U.S. Department of Missouri Housing 6.25% $ 37,800
Heights Missouri $ 714 2BR Housing and Urban Development
Partnership Development Commission
Section 8 Housing $ 4,900,000(9)
Assistance
Program(9)
11. London Village London, 32 $ 315- Federal Housing First National 2% $ 8,000
Partnership Kentucky $ 355 2BR Tax Credits Bank & Trust
$ 678,300(10)
<Caption>
OPERATING PROPERTY ANNUAL PROPERTY
PARTNERSHIP MANAGEMENT MANAGEMENT
NAME AGENT FEE
- -----------------------------------------------------------
9. Gregory Oaks WAJ Management 5% of net
Partnership rental income
10. Kensington Preservation 5% of net
Heights Management, Inc. rental income
Partnership
11. London Village Homeland, Inc. 5% of net
Partnership rental income
</Table>
- ----------
(1) Exclusive of utilities, unless indicated otherwise.
(8) (a) The terms of the Gregory Oaks Partnership's anticipated permanent first
mortgage loan in the amount of $465,000 are expected to include a term
of 30 years, an interest rate of 7% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(b) The terms of the Gregory Oaks Partnership's anticipated permanent
second mortgage loan in the amount of $700,000 are expected to include
a term of 30 years, an interest rate of 2% and payments of principal
and interest on the basis of a 30-year amortization schedule.
(c) The terms of the Gregory Oaks Partnership's anticipated permanent third
mortgage loan in the amount of $198,941 are expected to include a term
of 30 years, an interest rate of 0% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(9) The terms of the Kensington Heights Partnership's anticipated permanent
first mortgage loan in the amount of $4,900,000 are expected to include a
term of 35 years, an interest rate of 6.25% and payments of principal and
interest on the basis of a 35-year amortization schedule.
(10) The terms of the London Village Partnership's anticipated permanent first
mortgage loan in the amount of $678,300 are expected to include a term of
15 years, an interest rate of 2% and payments of principal and interest on
the basis of a 30-year amortization schedule.
7
<Page>
<Table>
<Caption>
OPERATING BASIC GOVERNMENT PERMANENT MORTGAGE ANNUAL
PARTNERSHIP LOCATION NUMBER MONTHLY ASSISTANCE MORTGAGE INTEREST RESERVE
NAME OF PROPERTY OF UNITS RENTS(1) ANTICIPATED LOAN RATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
12. Pecan Acres Lake Charles, 78 $ 460 1BR Federal Housing Collateral Mortgage 7.25% $ 15,600
Partnership Louisiana $ 540 2BR Tax Credits $ 2,730,000(11)
$ 680 4BR
13. Pine Meadow Prairie View, 60 $ 320 2BR RHS Sec. 515; $ 906,180; Texas 1%(2) $ 18,000
Partnership Texas HOME Investment Home Funds 2.24%
Partnerships $ 250,000(12)
Program(12)
14. Rosehill Topeka, 48 $ 610- Federal Housing Bank of Commerce 7.50% $ 9,600
Partnership Kansas $ 775 2BR Tax Credits $ 2,435,000(13)
<Caption>
OPERATING PROPERTY ANNUAL PROPERTY
PARTNERSHIP MANAGEMENT MANAGEMENT
NAME AGENT FEE
- -----------------------------------------------------------
12. Pecan Acres Sunquest 5% of net
Partnership Properties rental income
13. Pine Meadow Hamilton Valley 5% of net
Partnership Management rental income
Agent
14. Rosehill Continental 5% of net
Partnership Management, Inc. rental income
</Table>
- ----------
(1) Exclusive of utilities, unless indicated otherwise.
(2) Rural Housing Service ("RHS") (formerly Farmers Home Administration) 515
loan with a term of 50 years and a stated interest rate of between 7.5% and
9.5%, written down to an effective rate of 1% through an interest credit
subsidy, and payments of principal and interest on the basis of a 50-year
amortization schedule.
(11) The terms of the Pecan Acres Partnership's anticipated permanent first
mortgage loan in the amount of $2,730,000 are expected to include a term of
30 years, an interest rate of 7.25% and payments of principal and interest
on the basis of a 30-year amortization schedule.
(12) The terms of the Pine Meadow Partnership's anticipated permanent second
mortgage loan in the amount of $250,000 are expected to include a term of
30 years, an interest rate of 2.24% and payments of principal and interest
on the basis of a 30-year amortization schedule.
(13) The terms of the Rosehill Partnership's anticipated permanent first
mortgage loan in the amount of $2,435,000 are expected to include a term of
15 years, an interest rate of 7.50% and payments of principal and interest
on the basis of a 30-year amortization schedule.
8
<Page>
<Table>
<Caption>
OPERATING BASIC GOVERNMENT PERMANENT MORTGAGE ANNUAL
PARTNERSHIP LOCATION NUMBER MONTHLY ASSISTANCE MORTGAGE INTEREST RESERVE
NAME OF PROPERTY OF UNITS RENTS(1) ANTICIPATED LOAN RATE AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
15. Sandy Hill Greenville, 29 $ 305- Federal Housing Kentucky Trust 2% $ 7,250
Partnership Kentucky $ 370 2BR Tax Credits $ 619,559(14a)
Kentucky Trust 0%
$115,159(14b)
16. Tanglewood Panama, 24 $ 521 1BR RHS Sec. 515 $ 629,500 1%(2) $ 12,400
Partnership Oklahoma $ 570 2BR $ 579,975 1%(2)
17. Wagoner Village Wagoner, 31 $ 475 1BR RHS Sec. 515 $ 368,233 1%(2) $ 10,098
Partnership Oklahoma $ 515 2BR $ 639,785 1%(2)
18. Willowchase Hempstead, 57 $ 340 1BR RHS Sec. 515; $ 1,467,162; Texas 1%(2) $ 17,100
Partnership Texas $ 390 2BR HOME Investment Home Funds 1%
Partnerships $ 180,000(15)
Program(15)
<Caption>
OPERATING PROPERTY ANNUAL PROPERTY
PARTNERSHIP MANAGEMENT MANAGEMENT
NAME AGENT FEE
- ------------------------------------------------------------
15. Sandy Hill Homeland, Inc. 5% of net
Partnership rental income
16. Tanglewood Western Property $47 per
Partnership Management occupied unit
per month
17. Wagoner Village Green Companies $79 per
Partnership Development occupied unit
per month
18. Willowchase Hamilton Valley 5% of net
Partnership Management rental income
Agent
</Table>
- ----------
(1) Exclusive of utilities, unless indicated otherwise.
(2) Rural Housing Service ("RHS") (formerly Farmers Home Administration) 515
loan with a term of 50 years and a stated interest rate of between 7.5% and
9.5%, written down to an effective rate of 1% through an interest credit
subsidy, and payments of principal and interest on the basis of a 50-year
amortization schedule.
(14) (a) The terms of the Sandy Hill Partnership's anticipated permanent first
mortgage loan in the amount of $619,559 are expected to include a term
of 15 years, an interest rate of 2% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(b) The terms of the Sandy Hill Partnership's anticipated permanent second
mortgage loan in the amount of $115,159 are expected to include a term
of 15 years, an interest rate of 0% and payments of principal and
interest on the basis of a 30-year amortization schedule.
(15) The terms of the Willowchase Partnership's anticipated permanent second
mortgage loan in the amount of $180,000 are expected to include a term of
30 years, an interest rate of 1% and payments of principal and interest on
the basis of a 30-year amortization schedule.
9
<Page>
TERMS OF INVESTMENT IN OPERATING PARTNERSHIPS
<Table>
<Caption>
PERCENT OF TAX,
CREDITS/CASH OPERATING
OPERATING SERIES 47 FLOW/SALE GENERAL OPERATING
PARTNERSHIP CAPITAL PROCEEDS TO PARTNER DEFICIT
NAME CONTRIBUTION SERIES 47(1) CONTRIBUTION GUARANTEE(2)
- -----------------------------------------------------------------------------------
1. Bayou Bend $ 922,460 99.99/50/50 $ 100 $275,000 in
Partnership the aggregate
for 3 years
after
Breakeven
2. Brookside Park $ 1,833,445 49.995/ $ 100 $600,000 in
Partnership 7.50/5 the aggregate
for 3 years
after Rental
Achievement
3. Cedar Cove $ 927,226 99.99/20/20 $ 100 $260,000 in
Partnership the aggregate
for 3 years
after
Breakeven
4. Clayton Station $ 1,262,875 99.99/20/20 $ 90,600 $150,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
<Caption>
SERIES 47'S ANNUAL
APPROXIMATE OPERATING
AVERAGE ANNUAL DEVELOPMENT PARTNERSHIP ASSET
OPERATING OPERATING ANTICIPATED FEE TO MANAGEMENT FEE MANAGEMENT FEE
PARTNERSHIP PARTNERSHIP'S FEDERAL CREDIT UNAFFILIATED TO OPERATING TO BOSTON
NAME CREDIT BASE(3) TO INVESTORS(4) DEVELOPER GENERAL PARTNER ASSOCIATES
- ---------------------------------------------------------------------------------------------------------
1. Bayou Bend $ 840,639 $ 119,501 $ 317,492 $ 4,200 $ 4,200
Partnership
2. Brookside Park $ 13,954,739 $ 237,514 $ 1,016,285 $ 5,000 $ 5,000
Partnership
3. Cedar Cove $ 861,530 $ 120,118 $ 318,715 $ 4,050 $ 4,050
Partnership
4. Clayton Station $ 2,065,500 $ 162,544 $ 189,000 $ 2,500 $ 2,500
Partnership
</Table>
- ----------
(1) Each operating partnership has a fee simple ownership interest in its
respective apartment complex. Though Boston Associates' calculation of the
investors' rate of return assumes that Series 47 will not receive any
proceeds from the sale of the apartment complexes, the investors may receive
all or a portion of their capital back upon such a sale.
(2) Covers operating deficits after completion of the apartment complex
construction or operating deficits prior to completion which are the
unlimited obligation of the Operating General Partners.
(3) The credit base is the cost of constructing or rehabilitating the apartment
complex subject to certain reductions, such as land and permanent loan
costs.
(4) This amount is Series 47's share of the annual tax credit amount the
appropriate state credit agency has preliminarily awarded the apartment
complex.
10
<Page>
<Table>
<Caption>
PERCENT OF TAX,
CREDITS/CASH OPERATING
OPERATING SERIES 47 FLOW/SALE GENERAL OPERATING
PARTNERSHIP CAPITAL PROCEEDS TO PARTNER DEFICIT
NAME CONTRIBUTION SERIES 47(1) CONTRIBUTION GUARANTEE(2)
- -----------------------------------------------------------------------------------
5. Deer Meadow $ 369,627 99.99/20/20 $ 180,352 $100,000 in
Partnership the aggregate
for 3 years
after
Breakeven
6. Eastview $ 187,429 99.99/20/20 $ 100 $100,000 in
Partnership the aggregate
for 3 years
after
Breakeven
7. Elmwood $ 615,742 99.99/20/20 $ 100 $49,000 in the
Partnership aggregate for
3 years after
Breakeven
8. Green Manor $ 650,439 99.99/20/20 $ 100 $200,000 in
Partnership ` the aggregate
for 3 years
after
Breakeven
<Caption>
SERIES 47'S ANNUAL
APPROXIMATE OPERATING
AVERAGE ANNUAL DEVELOPMENT PARTNERSHIP ASSET
OPERATING OPERATING ANTICIPATED FEE TO MANAGEMENT FEE MANAGEMENT FEE
PARTNERSHIP PARTNERSHIP'S FEDERAL CREDIT UNAFFILIATED TO OPERATING TO BOSTON
NAME CREDIT BASE(3) TO INVESTORS(4) DEVELOPER GENERAL PARTNER ASSOCIATES
- ---------------------------------------------------------------------------------------------------------
5. Deer Meadow $ 215,064 $ 48,514 $ 215,064 $ 1,200 $ 1,200
Partnership
6. Eastview $ 118,967 $ 24,928 $ 118,967 $ 1,000 $ 1,000
Partnership
7. Elmwood $ 1,043,293 $ 81,894 $ 214,130 $ 1,800 $ 1,800
Partnership
8. Green Manor $ 575,125 $ 84,261 $ 229,063 $ 3,000 $ 3,000
Partnership
</Table>
- ----------
(1) Each operating partnership has a fee simple ownership interest in its
respective apartment complex. Though Boston Associates' calculation of the
investors' rate of return assumes that Series 47 will not receive any
proceeds from the sale of the apartment complexes, the investors may receive
all or a portion of their capital back upon such a sale.
(2) Covers operating deficits after completion of the apartment complex
construction or operating deficits prior to completion which are the
unlimited obligation of the Operating General Partners.
(3) The credit base is the cost of constructing or rehabilitating the apartment
complex subject to certain reductions, such as land and permanent loan
costs.
(4) This amount is Series 47's share of the annual tax credit amount the
appropriate state credit agency has preliminarily awarded the apartment
complex.
11
<Page>
<Table>
<Caption>
PERCENT OF TAX,
CREDITS/CASH OPERATING
OPERATING SERIES 47 FLOW/SALE GENERAL OPERATING
PARTNERSHIP CAPITAL PROCEEDS TO PARTNER DEFICIT
NAME CONTRIBUTION SERIES 47(1) CONTRIBUTION GUARANTEE(2)
- -----------------------------------------------------------------------------------
9. Gregory Oaks $ 1,236,038 99.99/20/20 $ 100 $175,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
10. Kensington $ 2,338,787 99.98/10/20 $ 100 $500,000 in
Heights the aggregate
Partnership for 3 years
after Rental
Achievement
11. London Village $ 1,921,918 99.99/20/20 $ 1,600 $150,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
12. Pecan Acres $ 1,169,883 49.995/25/25 $ 682,649 $425,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
<Caption>
SERIES 47'S ANNUAL
APPROXIMATE OPERATING
AVERAGE ANNUAL DEVELOPMENT PARTNERSHIP ASSET
OPERATING OPERATING ANTICIPATED FEE TO MANAGEMENT FEE MANAGEMENT FEE
PARTNERSHIP PARTNERSHIP'S FEDERAL CREDIT UNAFFILIATED TO OPERATING TO BOSTON
NAME CREDIT BASE(3) TO INVESTORS(4) DEVELOPER GENERAL PARTNER ASSOCIATES
- ---------------------------------------------------------------------------------------------------------
9. Gregory Oaks $ 1,993,809 $ 159,090 $ 224,928 $ 2,400 $ 2,400
Partnership
10. Kensington $ 5,180,426 $ 299,095 $ 855,000 $ 5,000 $ 5,000
Heights
Partnership
11. London Village $ 3,143,400 $ 247,369 $ 231,000 $ 2,500 $ 2,500
Partnership
12. Pecan Acres $ 5,923,063 $ 149,610 $ 334,911 $ 2,925 $ 2,925
Partnership
</Table>
- ----------
(1) Each operating partnership has a fee simple ownership interest in its
respective apartment complex. Though Boston Associates' calculation of the
investors' rate of return assumes that Series 47 will not receive any
proceeds from the sale of the apartment complexes, the investors may receive
all or a portion of their capital back upon such a sale.
(2) Covers operating deficits after completion of the apartment complex
construction or operating deficits prior to completion which are the
unlimited obligation of the Operating General Partners.
(3) The credit base is the cost of constructing or rehabilitating the apartment
complex subject to certain reductions, such as land and permanent loan
costs.
(4) This amount is Series 47's share of the annual tax credit amount the
appropriate state credit agency has preliminarily awarded the apartment
complex.
12
<Page>
<Table>
<Caption>
PERCENT OF TAX,
CREDITS/CASH OPERATING
OPERATING SERIES 47 FLOW/SALE GENERAL OPERATING
PARTNERSHIP CAPITAL PROCEEDS TO PARTNER DEFICIT
NAME CONTRIBUTION SERIES 47(1) CONTRIBUTION GUARANTEE(2)
- -----------------------------------------------------------------------------------
13. Pine Meadow $ 724,652 99.99/20/20 $ 100 $235,000 in
Partnership the aggregate
for 3 years
after
Breakeven
14. Rosehill $ 2,540,504 99.99/20/20 $ 100 $500,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
15. Sandy Hill $ 1,825,743 99.99/20/20 $ 1,600 $150,000 in
Partnership the aggregate
for 3 years
after Rental
Achievement
16. Tanglewood $ 423,108 99.99/20/20 $ 100 $100,000 in
Partnership the aggregate
for 3 years
after
Breakeven
<Caption>
SERIES 47'S ANNUAL
APPROXIMATE OPERATING
AVERAGE ANNUAL DEVELOPMENT PARTNERSHIP ASSET
OPERATING OPERATING ANTICIPATED FEE TO MANAGEMENT FEE MANAGEMENT FEE
PARTNERSHIP PARTNERSHIP'S FEDERAL CREDIT UNAFFILIATED TO OPERATING TO BOSTON
NAME CREDIT BASE(3) TO INVESTORS(4) DEVELOPER GENERAL PARTNER ASSOCIATES
- ---------------------------------------------------------------------------------------------------------
13. Pine Meadow $ 740,666 $ 93,875 $ 233,149 $ 4,500 $ 4,500
Partnership
14. Rosehill $ 4,024,007 $ 329,111 $ 804,802 $ 3,000 $ 3,000
Partnership
15. Sandy Hill $ 2,986,100 $ 234,991 $ 221,000 $ 2,500 $ 2,500
Partnership
16. Tanglewood $ 244,503 $ 56,273 $ 244,503 $ 1,200 $ 1,200
Partnership
</Table>
- ----------
(1) Each operating partnership has a fee simple ownership interest in its
respective apartment complex. Though Boston Associates' calculation of the
investors' rate of return assumes that Series 47 will not receive any
proceeds from the sale of the apartment complexes, the investors may receive
all or a portion of their capital back upon such a sale.
(2) Covers operating deficits after completion of the apartment complex
construction or operating deficits prior to completion which are the
unlimited obligation of the Operating General Partners.
(3) The credit base is the cost of constructing or rehabilitating the apartment
complex subject to certain reductions, such as land and permanent loan
costs.
(4) This amount is Series 47's share of the annual tax credit amount the
appropriate state credit agency has preliminarily awarded the apartment
complex.
13
<Page>
<Table>
<Caption>
PERCENT OF TAX,
CREDITS/CASH OPERATING
OPERATING SERIES 47 FLOW/SALE GENERAL OPERATING
PARTNERSHIP CAPITAL PROCEEDS TO PARTNER DEFICIT
NAME CONTRIBUTION SERIES 47(1) CONTRIBUTION GUARANTEE(2)
- -----------------------------------------------------------------------------------
17. Wagoner Village $ 341,378 99.99/40/40 $ 100 Unlimited in
Partnership duration and
amount
18. Willowchase $ 935,799 99.99/20/20 $ 100 $250,000 in
Partnership the aggregate
for 3 years
after Breakeven
<Caption>
SERIES 47'S ANNUAL
APPROXIMATE OPERATING
AVERAGE ANNUAL DEVELOPMENT PARTNERSHIP ASSET
OPERATING OPERATING ANTICIPATED FEE TO MANAGEMENT FEE MANAGEMENT FEE
PARTNERSHIP PARTNERSHIP'S FEDERAL CREDIT UNAFFILIATED TO OPERATING TO BOSTON
NAME CREDIT BASE(3) TO INVESTORS(4) DEVELOPER GENERAL PARTNER ASSOCIATES
- ---------------------------------------------------------------------------------------------------------
17. Wagoner Village $ 847,123 $ 45,399 $ 198,400 $ 2,004 $ 3,100
Partnership
18. Willowchase $ 842,474 $ 121,338 $ 325,398 $ 4,275 $ 4,275
Partnership
</Table>
- ----------
(1) Each operating partnership has a fee simple ownership interest in its
respective apartment complex. Though Boston Associates' calculation of the
investors' rate of return assumes that Series 47 will not receive any
proceeds from the sale of the apartment complexes, the investors may receive
all or a portion of their capital back upon such a sale.
(2) Covers operating deficits after completion of the apartment complex
construction or operating deficits prior to completion which are the
unlimited obligation of the Operating General Partners.
(3) The credit base is the cost of constructing or rehabilitating the apartment
complex subject to certain reductions, such as land and permanent loan
costs.
(4) This amount is Series 47's share of the annual tax credit amount the
appropriate state credit agency has preliminarily awarded the apartment
complex.
14
<Page>
THE BAYOU BEND PARTNERSHIP
(BAYOU BEND APARTMENTS)
Bayou Bend Apartments is an existing 56-unit apartment complex for families
which is to be rehabilitated in Waller, Texas. Bayou Bend Apartments will
consist of 14 one-bedroom units and 42 two-bedroom units contained in 4
buildings. The complex will offer a community room and central laundry
facilities.
Individual units will contain a refrigerator, range, air conditioning,
wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Bayou Bend Apartments is anticipated to begin in January,
2004. The Operating General Partner anticipates that completion of
rehabilitation and occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 April, 2004 8 April, 2004
8 May, 2004 8 May, 2004
8 June, 2004 8 June, 2004
8 July, 2004 8 July, 2004
8 August, 2004 8 August, 2004
8 September, 2004 8 September, 2004
8 October, 2004 8 October, 2004
</Table>
The Bayou Bend Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Bayou Bend Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
15
<Page>
THE BROOKSIDE PARK PARTNERSHIP
(BROOKSIDE PARK APARTMENTS)
Brookside Park Apartments is a 200-unit apartment complex for families which is
being constructed in Atlanta, Georgia. Brookside Park Apartments will consist of
56 one-bedroom units, 102 two-bedroom units and 42 three-bedroom units contained
in 9 buildings. The complex will offer a community room and central laundry
facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Construction of Brookside Park Apartments began in January, 2003. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
10 December, 2003 10 January, 2004
10 January, 2004 10 February, 2004
10 February, 2004 10 March, 2004
10 March, 2004 10 April, 2004
20 April, 2004 20 May, 2004
20 May, 2004 20 June, 2004
20 June, 2004 20 July, 2004
20 July, 2004 20 August, 2004
20 August, 2004 20 September, 2004
20 September, 2004 20 October, 2004
20 October, 2004 20 November, 2004
20 November, 2004 20 December, 2004
</Table>
16
<Page>
THE CEDAR COVE PARTNERSHIP
(CEDAR COVE APARTMENTS)
Cedar Cove Apartments is an existing 54-unit apartment complex for families
which is to be rehabilitated in Sealy, Texas. Cedar Cove Apartments will consist
of 16 one-bedroom units and 38 two-bedroom units contained in 4 buildings. The
complex will offer a community room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Cedar Cove Apartments is anticipated to begin in January,
2004. The Operating General Partner anticipates that completion of
rehabilitation and occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 April, 2004 8 April, 2004
8 May, 2004 8 May, 2004
8 June, 2004 8 June, 2004
8 July, 2004 8 July, 2004
8 August, 2004 8 August, 2004
8 September, 2004 8 September, 2004
6 October, 2004 6 October, 2004
</Table>
The Cedar Cove Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Cedar Cove Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
17
<Page>
THE CLAYTON STATION PARTNERSHIP
(CLAYTON STATION APARTMENTS)
Clayton Station Apartments is a 29-unit apartment complex for senior citizens
which is being constructed on Old Main Street in Munfordville, Kentucky. Clayton
Station Apartments will consist of 29 two-bedroom units contained in 5
buildings. The complex will offer a community room.
Individual units will contain a refrigerator, range, dishwasher, disposal,
washer/dryer hook-ups, air conditioning, wall-to-wall carpeting, cable
television hook-up, and an emergency call system.
Construction of Clayton Station Apartments began in August, 2003. The Operating
General Partners anticipate that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 March, 2004 14 April, 2004
8 April, 2004 15 May, 2004
8 May, 2004
5 June, 2004
</Table>
THE DEER MEADOW PARTNERSHIP
(DEER MEADOW APARTMENTS)
Deer Meadow Apartments is a 24-unit apartment complex for families which is
being constructed on Beam Street in Tishomingo, Oklahoma. Deer Meadow Apartments
will consist of 2 one-bedroom units, 18 two-bedroom units and 4 three-bedroom
units contained in 4 buildings. The complex will offer a community room and
central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Construction of Deer Meadow Apartments began in August, 2003. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
4 December, 2003 4 April, 2004
4 January, 2004 4 May, 2004
8 February, 2004 4 June, 2004
8 March, 2004 4 July, 2004
4 August, 2004
4 September, 2004
</Table>
18
<Page>
THE EASTVIEW PARTNERSHIP
(EASTVIEW FAMILY HOUSING APARTMENTS)
Eastview Family Housing Apartments is an existing 16-unit apartment complex for
families which is being rehabilitated on East 4th Street in Watonga, Oklahoma.
Eastview Family Housing Apartments will consist of 13 two-bedroom units and 3
three-bedroom units contained in 8 buildings. The complex will offer a community
room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Eastview Family Housing Apartments began in June, 2003. The
Operating General Partner anticipates that completion of rehabilitation and
occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
6 December, 2003 6 March, 2004
6 January, 2004 6 April, 2004
4 February, 2004 4 May, 2004
</Table>
The Eastview Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Eastview Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
19
<Page>
THE ELMWOOD PARTNERSHIP
(ELMWOOD APARTMENTS)
Elmwood Apartments is a 24-unit apartment complex for senior citizens which is
to be constructed on Highway 17 Business North in Vanceboro, North Carolina.
Elmwood Apartments will consist of 20 one-bedroom units and 4 two-bedroom units
contained in 1 building. The complex will offer a community room.
Individual units will contain a refrigerator, range, washer/dryer hookups,
dishwasher, air conditioning, wall-to-wall carpeting, cable television hook-up,
an emergency call system, and a patio or porch.
Construction of Elmwood Apartments is anticipated to begin in January, 2004. The
Operating General Partner anticipates that construction completion and occupancy
will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
5 October, 2004 5 November, 2004
5 November, 2004 5 December, 2004
5 December, 2004, 5 January, 2005
5 January, 2005 5 February, 2005
4 February, 2005 4 March, 2005
</Table>
20
<Page>
THE GREEN MANOR PARTNERSHIP
(GREEN MANOR APARTMENTS)
Green Manor Apartments is an existing 40-unit apartment complex for families
which is to be rehabilitated in Hempstead, Texas. Green Manor Apartments will
consist of 8 one-bedroom units and 32 two-bedroom units contained in 4
buildings. The complex will offer a community room and central laundry
facilities.
Individual units will contain a refrigerator, range, air conditioning,
wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Green Manor Apartments is anticipated to begin in January,
2004. The Operating General Partner anticipates that completion of
rehabilitation and occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 March, 2004 8 March, 2004
8 April, 2004 8 April, 2004
8 May, 2004 8 May, 2004
8 June, 2004 8 June, 2004
8 July, 2004 8 July, 2004
</Table>
The Green Manor Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Green Manor Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
21
<Page>
THE GREGORY OAKS PARTNERSHIP
(GREGORY OAKS APARTMENTS)
Gregory Oaks Apartments is an existing 32-unit apartment complex for families
which is being rehabilitated on East Lane in Raleigh, North Carolina. Gregory
Oaks Apartments will consist of 32 two-bedroom units contained in 8 buildings.
The complex will offer a community and central laundry facilities.
Individual units will contain a refrigerator, range, disposal, and a patio.
Rehabilitation of Gregory Oaks Apartments began in November, 2003. The Operating
General Partner anticipates that completion of rehabilitation and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
5 May, 2004 5 May, 2004
5 June, 2004 5 June, 2004
5 July, 2004 5 July, 2004
5 August, 2004 5 August, 2004
5 September, 2004 5 September, 2004
5 October, 2004 5 October, 2004
2 November, 2004 2 November, 2004
</Table>
The Gregory Oaks Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Gregory Oaks Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
22
<Page>
THE KENSINGTON HEIGHTS PARTNERSHIP
(KENSINGTON HEIGHTS APARTMENTS)
Kensington Heights Apartments is an existing 126-unit apartment complex for
senior citizens which is being rehabilitated in Kansas City, Missouri.
Kensington Heights Apartments will consist of 122 one-bedroom units and 4
two-bedroom units contained in 1 building. The complex will offer a community
room, recreation room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, cable television hook-up, and an emergency call system.
Rehabilitation of Kensington Heights Apartments began in October, 2003. The
Operating General Partner anticipates that completion of rehabilitation and
occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
100 June, 2004 94 January, 2004
26 October, 2004 32 December, 2004
</Table>
The Kensington Heights Partnership is being substantially rehabilitated and the
new tenants will be required to comply with rent and income restrictions of the
tax credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Kensington Heights Partnership are
provided as they would not be indicative of its operation as a rehabilitated tax
credit property.
THE LONDON VILLAGE PARTNERSHIP
(LONDON VILLAGE APARTMENTS)
London Village Apartments is a 32-unit apartment complex for senior citizens
which is being constructed on Whitley Street in London, Kentucky. London Village
Apartments will consist of 32 two-bedroom units contained in 6 buildings. The
complex will offer a community room.
Individual units will contain a refrigerator, range, dishwasher, disposal,
washer/dryer hook-ups, air conditioning, wall-to-wall carpeting, cable
television hook-up, and an emergency call system.
Construction of London Village Apartments began in October, 2003. The Operating
General Partners anticipate that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 May, 2004 8 June, 2004
8 June, 2004 8 July, 2004
8 July, 2004 8 August, 2004
8 August, 2004 8 September, 2004
</Table>
23
<Page>
THE PECAN ACRES PARTNERSHIP
(LA MAISON APARTMENTS)
La Maison Apartments is a 78-unit apartment complex for families which is being
constructed in Lake Charles, Louisiana. La Maison Apartments will consist of 16
one-bedroom units, 54 two-bedroom units and 8 four-bedroom units contained in 12
buildings. The complex will offer a community room and central laundry
facilities.
Individual units will contain a refrigerator, range, dishwasher, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Construction of La Maison Apartments began in December, 2003. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
10 May, 2004 10 June, 2004
15 June, 2004 15 July, 2004
15 July, 2004 15 August, 2004
15 August, 2004 15 September, 2004
15 September, 2004 15 October, 2004
8 October, 2004 8 November, 2004
</Table>
24
<Page>
THE PINE MEADOW PARTNERSHIP
(PINE MEADOW APARTMENTS)
Pine Meadow Apartments is an existing 60-unit apartment complex for families
which is to be rehabilitated in Prairie View, Texas. Pine Meadow Apartments will
consist of 60 two-bedroom units contained in 4 buildings. The complex will offer
a community room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Pine Meadow Apartments is anticipated to begin in January,
2004. The Operating General Partner anticipates that completion of
rehabilitation and occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
10 April, 2004 10 April, 2004
10 May, 2004 10 May, 2004
10 June, 2004 10 June, 2004
10 July, 2004 10 July, 2004
10 August, 2004 10 August, 2004
10 September, 2004 10 September, 2004
</Table>
The Pine Meadow Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Pine Meadow Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
25
<Page>
THE ROSEHILL PARTNERSHIP
(ROSEHILL APARTMENTS PHASE I APARTMENTS)
Rosehill Apartments Phase I Apartments is a 48-unit apartment complex for senior
citizens which is being constructed on SW Gauge Street and SW 37th Street in
Topeka, Kansas. Rosehill Apartments Phase I Apartments will consist of 48
two-bedroom units contained in 24 buildings. The complex will offer a community
room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, cable television hook-up, and a patio.
Construction of Rosehill Apartments Phase I Apartments began in October, 2003.
The Operating General Partner anticipates that construction completion and
occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
12 August, 2004 12 September, 2004
12 September, 2004 12 October, 2004
12 October, 2004 12 November, 2004
12 November, 2004 12 December, 2004
</Table>
THE SANDY HILL PARTNERSHIP
(SANDY HILL APARTMENTS)
Sandy Hill Apartments is a 29-unit apartment complex for senior citizens which
is being constructed on Cleaton Road in Greenville, Kentucky. Sandy Hill
Apartments will consist of 29 two-bedroom units contained in 3 buildings. The
complex will offer a community room.
Individual units will contain a refrigerator, range, dishwasher, disposal,
washer/dryer hook-ups, air conditioning, wall-to-wall carpeting, cable
television hook-up, and an emergency call system.
Construction of Sandy Hill Apartments began in August, 2003. The Operating
General Partner anticipates that construction completion and occupancy will
occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 March, 2004 8 April, 2004
8 April, 2004 8 May, 2004
8 May, 2004 8 June, 2004
5 June, 2004 5 July, 2004
</Table>
26
<Page>
THE TANGLEWOOD PARTNERSHIP
(TANGLEWOOD VILLAGE APARTMENTS)
Tanglewood Village Apartments is an existing 24-unit apartment complex for
families which is being rehabilitated on Rock Jail Road in Panama, Oklahoma.
Tanglewood Village Apartments will consist of 12 one-bedroom units and 12
two-bedroom units contained in 3 buildings. The complex will offer a community
room and central laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Tanglewood Village Apartments began in June, 2003. The
Operating General Partner anticipates that completion of rehabilitation and
occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
8 December, 2003 8 March, 2004
8 January, 2004 8 April, 2004
8 February, 2004 8 May, 2004
</Table>
The Tanglewood Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Tanglewood Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
27
<Page>
THE WAGONER VILLAGE PARTNERSHIP
(WAGONER VILLAGE APARTMENTS)
Wagoner Village Apartments is an existing 31-unit apartment complex for families
which is being rehabilitated on South Dewey in Wagoner, Oklahoma. Wagoner
Village Apartments will consist of 16 one-bedroom units and 15 two-bedroom units
contained in 4 buildings. The complex will offer a community room and central
laundry facilities.
Individual units will contain a refrigerator, range, dishwasher, disposal, air
conditioning, wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Wagoner Village Apartments began in January, 2003. The
Operating General Partner anticipates that completion of rehabilitation and
occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
11 October, 2003 11 January, 2004
10 November, 2003 10 February, 2004
10 December, 2003 10 March, 2004
</Table>
The Wagoner Village Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Wagoner Village Partnership are provided
as they would not be indicative of its operation as a rehabilitated tax credit
property.
28
<Page>
THE WILLOWCHASE PARTNERSHIP
(WILLOWCHASE APARTMENTS)
Willowchase Apartments is an existing 57-unit apartment complex for families
which is to be rehabilitated in Hempstead, Texas. Willowchase Apartments will
consist of 16 one-bedroom units and 41 two-bedroom units contained in 4
buildings. The complex will offer a community room and central laundry
facilities.
Individual units will contain a refrigerator, range, air conditioning,
wall-to-wall carpeting, and cable television hook-up.
Rehabilitation of Willowchase Apartments is anticipated to begin in January,
2004. The Operating General Partner anticipates that completion of
rehabilitation and occupancy will occur as follows:
<Table>
<Caption>
NUMBER OF UNITS COMPLETION NUMBER OF UNITS RENT-UP
- --------------------------------------------------------------------------------
15 April, 2004 15 April, 2004
15 May, 2004 15 May, 2004
10 June, 2004 10 June, 2004
10 July, 2004 10 July, 2004
7 August, 2004 7 August, 2004
</Table>
The Willowchase Partnership is being substantially rehabilitated and the new
tenants will be required to comply with rent and income restrictions of the tax
credit program. The tax credit operations of the apartment complex will be
materially different from its prior operation. In addition, the financing,
ownership and management of the apartment complex will change. Accordingly, no
historical financial statements for The Willowchase Partnership are provided as
they would not be indicative of its operation as a rehabilitated tax credit
property.
* * * * * * * *
29
<Page>
BOSTON CAPITAL TAX CREDIT FUND V L.P.
[GRAPHIC]
PROSPECTUS
BOSTON CAPITAL
TAX CREDIT FUND V L.P.
SERIES 47 AND 48
BOSTON CAPITAL'S PURPOSE--
- - To invest in other limited partnerships that will each develop, own and
operate an apartment complex used as low and moderate income housing.
TERMS OF OFFERING--
- - Series 47 will be offered first and Series 48 will begin after Series 47 is
finished;
- - each series will offer a minimum of 250,000 Beneficial Assignee Certificates
that are the equivalent of limited partnership interests in each series. It
is anticipated that each series will offer a maximum of 3,500,000
certificates;
- - the price of the certificates is $10 each with a minimum investment of
$5,000;
- - your money will be held in escrow until at least 250,000 certificates are
sold.
BOSTON CAPITAL'S INVESTORS WILL RECEIVE--
- - Federal housing tax credits;
- - tax losses that can offset passive income from any other investments;
- - profits, if any, from the sale of the apartment complexes.
RISK FACTORS AS TO BOSTON CAPITAL, WHICH BEGIN ON PAGE 34 OF THIS PROSPECTUS--
- - tax credit rules can be complicated and the failure of apartment complexes to
comply with them can result in the loss and/or recapture of tax credits
sometimes years after tax credits are allocated;
- - the use of tax credits is limited, among other things, to the amount of tax
liability not resulting from the alternative minimum tax and by the passive
activity rules that limit the amount of tax credits an individual can use in
any one year to as little as $7,000;
- - tax credits may be the only material benefit from the investment because the
investors may not get back their capital;
- - tax credits are not guaranteed;
- - Boston Capital will generate a smaller amount of tax credits in the initial
and final years of the investment;
- - when the apartment complexes are eventually sold, there may not be enough
money to return the original investment;
- - there are limits on the transferability of the certificates including a
prohibition of more than 50% of the certificates transferring in any 12-month
period;
- - it is unlikely that there will be a market for the certificates;
- - any transactions between Boston Capital, its general partner, and their
affiliates will be entered into without the benefit of arm's length
bargaining and will involve potential conflicts of interest; Boston Capital's
general partner and affiliates will receive substantial fees, including a
share of capital distributions, which could equal approximately 11.5% of the
offering.
<Table>
<Caption>
SELLING PROCEEDS WORKING FEES AND EXPENSES
PUBLIC COMMISSIONS TO BOSTON APARTMENT CAPITAL OF GENERAL PARTNER
PRICE AND FEES CAPITAL COMPLEXES RESERVES AND AFFILIATES
- --------------------------------------------------------------------------------------------------------------------
Per Certificate $ 10.00 $ 0.90 $ 9.10 $ 7.51-7.61 $ .40 $ 1.09-1.19
- --------------------------------------------------------------------------------------------------------------------
Per Series if minimum
amount raised $ 2,500,000 $ 225,000 $ 2,275,000 $ 1,877,500 $ 100,000 $ 297,500
- --------------------------------------------------------------------------------------------------------------------
Per Series if maximum
amount raised $ 35,000,000 $ 3,150,000 $ 31,850,000 $ 26,635,000 $ 1,400,000 $ 3,815,000
- --------------------------------------------------------------------------------------------------------------------
</Table>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
BOSTON CAPITAL TAX CREDIT FUND V L.P. IS NOT A MUTUAL FUND OR ANY OTHER TYPE OF
INVESTMENT COMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940 AND
IS NOT SUBJECT TO REGULATION THEREUNDER.
January 2, 2004
<Page>
The attorney general of the state of New York has not passed on or endorsed the
merits of this offering. Any representation to the contrary is unlawful.
Boston Capital Services, Inc., an affiliate of Boston Capital, is the managing
underwriter for this offering. No series of certificates will be sold unless at
least 250,000 certificates are sold. This is a best efforts offering, which
means no specified amount of capital will be raised. Boston Capital Services,
Inc., may receive up to $0.90 (9%) of each certificate sold as compensation.
Any investor or prospective investor may obtain, without charge, a copy of any
document included as an exhibit to the Registration Statement filed with the
Securities and Exchange Commission with respect to the securities offered hereby
upon written request to Boston Capital Tax Credit Fund V L.P., c/o Boston
Capital Corporation, One Boston Place, Suite 2100, Boston, Massachusetts 02108,
Attention: Richard J. DeAgazio.
THE USE OF FORECASTS IN THIS OFFERING IS PROHIBITED. ANY REPRESENTATION TO THE
CONTRARY AND ANY PREDICTION, WRITTEN OR ORAL, EXCEPT AS SET FORTH IN THIS
PROSPECTUS, AS TO THE AMOUNT OR CERTAINTY OF ANY PRESENT OR FUTURE CASH BENEFIT
OR TAX CONSEQUENCE WHICH MAY FLOW FROM AN INVESTMENT IN BOSTON CAPITAL IS NOT
PERMITTED.
The investment described in this Prospectus has been registered with the
Internal Revenue Service (the "IRS") as a tax shelter pursuant to procedures set
forth in the Tax Reform Act of 1984. When we receive a tax shelter
registration number from the IRS, we will provide it to investors. Investors
must include it on their tax returns for the period of time in which they are
investors. Issuance of a registration number does not indicate that this
investment or the claimed tax benefits have been reviewed, examined or
approved by the IRS.
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representation must not
be relied upon. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any of the securities offered hereby in any
state in which, or to any person to whom, it is unlawful to make such offer.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of Boston Capital since the respective dates at which information is
given herein, at the date hereof; however, if any material change occurs while
this Prospectus is required by law to be delivered, this Prospectus will be
amended or supplemented accordingly.
2
<Page>
SUITABILITY OF AN INVESTMENT IN CERTIFICATES
ALL INVESTORS
The certificates being offered for sale through this Prospectus are suitable for
all investors who (1) reasonably expect to have a tax liability during the next
twelve years against which the tax credits can be used to offset their federal
income tax liability, regardless of income; and (2) have adequate financial
means to bear the lack of liquidity and the economic risks associated with
long-term investments in real estate. Boston Capital and any broker must make
every reasonable effort to determine that this investment is suitable and
appropriate for an investor, based on information provided by the investor.
Boston Capital does not deem sales of certificates completed until five
business days after an investor has received this Prospectus, during which
time you may receive a refund of your subscription.
The certificates may not be suitable for investors that must pay the alternative
minimum tax or are tax-exempt. Moreover, if the investor distributes its
certificates as a gift, the donor and not the donee must satisfy all applicable
suitability requirements.
ALTERNATIVE MINIMUM TAX/TENTATIVE MINIMUM TAX
The tax code imposes an alternative minimum tax on all taxpayers, except certain
qualifying small corporations, to the extent that this tax exceeds their
regularly computed income tax liability. Generally, the alternative minimum tax
requires that taxpayers pay a percentage of income as taxes, regardless of the
presence of certain items that the taxpayer would otherwise be able to deduct.
Tax credits cannot be used to offset this tax. Consequently, an investment in
certificates may not be a suitable investment for an investor expecting to be
subject to the alternative minimum tax or an investor that expects the
difference between your tax liability and the tentative minimum tax to be
minimal.
Regardless of whether or not a prospective investor is otherwise subject to the
alternative minimum tax, each prospective investor must determine what your
tentative minimum tax would be, in order to determine the maximum amount of tax
credits which you can use in any given year. The amount of tax credits which an
investor may use in any year may not exceed the difference between (1) your
income tax as computed under the normal formula for determining income tax
liability and (2) your tentative minimum tax as computed under the alternative
minimum tax formula.
For example, an investor, not otherwise subject to the alternative minimum tax,
with $15,000 in regular income tax liability and $10,000 in tentative minimum
tax liability, could use up to $5,000 in tax credits to offset your regular
income tax liability. Any additional tax credits allocated to such investor for
the applicable year which could not be utilized in that year, could be
3
<Page>
carried back one year or forward twenty years, subject to limitations on
carry-backs for certain taxpayers. See the sections in this Prospectus
entitled "Risk Factors--Alternative Minimum Tax Could Reduce or Eliminate the
Benefits of the Investment" and "Federal Income Tax Matters--Certain Other
Considerations--Alternative Minimum Tax."
TAX-EXEMPT ENTITIES
It is unlikely that a tax-exempt entity would be able to use tax credits because
of its lack of income tax liability. However, if a tax-exempt entity has, and
expects to continue to have, unrelated business taxable income ("UBTI"), it
could use tax credits to offset the federal tax on such income. See "Federal
Income Tax Matters--Investment by Tax-Exempt Entities."
CONSIDERATIONS FOR INDIVIDUAL AND
OTHER NON-CORPORATE INVESTORS
- - investors must have minimum annual gross income for the current year of
$35,000 and net worth--excluding home, home furnishings and automobiles--of
not less than $35,000; or net worth--excluding home, home furnishings and
automobiles--of not less than $150,000. A description of the minimum net
worth and income requirements that various states impose on investors can be
found on pages 6-8.
- - if more than one investor purchases certificates together, each investor must
satisfy all applicable suitability requirements.
- - individual taxpayers may use tax credits from passive activities to offset
certain amounts of tax liability from non-passive sources. Individuals can
utilize tax credits to offset taxes on up to $25,000 of active or portfolio
income. Thus, an individual taxed at the 28% tax rate could use tax credits
to offset $7,000 (28% x $25,000) in taxes on such income, and an individual
taxed at the 33% or 35% tax rate could use tax credits to offset $8,250 and
$8,750, respectively, in taxes on such income.
- - married individuals filing separately may not use tax credits to offset taxes
on non-passive income unless they live apart for the entire year.
- - if married persons live apart for the entire year, each individual may use
tax credits to offset taxes on up to $12,500 of non-passive income for that
year.
- - there are special rules governing an investor's ability to carry unused tax
credits and historic tax credits forward to future years. See "Federal Income
Tax Matters--Passive Loss and Tax Credit Limitations".
- - investors can fully use the historic tax credit only if the adjusted gross
income is not greater than $200,000 in that year; the use of the historic tax
credit is phased out when adjusted gross income is between $200,000 and
4
<Page>
$250,000; and investors cannot use the historic tax credit at all if their
adjusted gross income is greater than $250,000.
CONSIDERATIONS FOR FOREIGN INVESTORS
- - definition: natural person and resident of the United States, but a citizen
of another country.
- - must have, and expect to have in the future, income subject to taxation by
the United States sufficient to use the expected tax credits to offset
federal income tax liability.
- - the tax code may require Boston Capital to withhold up to 30% of any
distributions.
- - the Foreign Investment in Real Property Tax Act may require Boston Capital to
withhold part of any distribution of proceeds from the sale of an apartment
complex or interest in an operating partnership otherwise due.
- - should consult a legal, tax and/or business advisor because your tax
consequences of an investment in certificates by foreign investors may differ
significantly from those described in this Prospectus.
5
<Page>
Various states have established suitability standards for investors that are in
addition to those established by Boston Capital and which must be met by
investors residing in any such state, as illustrated by the following chart:
<Table>
<Caption>
ADDITIONAL
MINIMUM
ADDITIONAL NET WORTH
MINIMUM (EXCLUSIVE OF
ANNUAL HOME, HOME
GROSS FURNISHINGS,
STATE INCOME AUTOMOBILES) OTHER
----- ---------- ------------- -----
Alabama $45,000 $45,000 or
Alaska no minimum, plus $150,000
Arizona
Arkansas
Indiana
Kansas
Kentucky
Massachusetts
Minnesota
Mississippi
North Carolina
Oklahoma
Oregon
SouthDakota
Texas
Vermont
Virginia
Wisconsin
Iowa $60,000, plus $60,000, or For investments by or on behalf of a fiduciary account, the
Washington no minimum, plus $175,000 suitability requirements must be met by either the donor of
the funds for investment, or the beneficiaries of the
fiduciary account (in which case, the beneficiaries' share
of the fiduciary account may be included in determining
whether such standards are met).
California $60,000, plus $60,000, or For investments by or on behalf of a fiduciary account, the
no minimum, plus $225,000 suitability requirements must be met by either the donor of
the funds for investment, or the beneficiaries of the
fiduciary account (in which case, the beneficiaries' share
of the fiduciary account may be included in determining
whether such standards are met).
</Table>
6
<Page>
<Table>
<Caption>
ADDITIONAL
MINIMUM
ADDITIONAL NET WORTH
MINIMUM (EXCLUSIVE OF
ANNUAL HOME, HOME
GROSS FURNISHINGS,
STATE INCOME AUTOMOBILES) OTHER
----- ---------- ------------- -----
Maine $50,000, and $50,000, or Additional investments not made at the time of initial
no minimum, plus $200,000 investment must be for a minimum of $5,000.
Michigan $60,000 plus $60,000, or
no minimum, plus $225,000
Nebraska $45,000, and $45,000, or Investors are allowed at least five business days after they
no minimum, plus $150,000 receive this Prospectus until the sale of certificates is
final; they may not invest more than ten percent (10%) of
net worth in any series.
New Hampshire $50,000, plus $125,000, or
no minimum, plus $250,000
New Mexico $60,000, plus $60,000, or Minimum Offering: New Mexico investors' money will not be
no minimum, and $225,000 released from escrow until at least $7,000,000 has been
raised by Series 47.
Minimum Investment: The minimum investment for New Mexico
investors is $5,000 (500 certificates).
The Dealer-Manager and the Soliciting Dealers selling
limited partnership interests in Boston Capital to the State
of New Mexico are responsible for determining that an
investment is suitable for each individual investor in light
of the investor's age, education level, investment
experience, investment objectives, financial situation and
needs. The staff of the New Mexico Securities Division
recommends that investors not invest money in Boston Capital
which they might need for their future financial security.
</Table>
7
<Page>
<Table>
<Caption>
ADDITIONAL
MINIMUM
ADDITIONAL NET WORTH
MINIMUM (EXCLUSIVE OF
ANNUAL HOME, HOME
GROSS FURNISHINGS,
STATE INCOME AUTOMOBILES) OTHER
----- ---------- ------------- -----
Ohio $45,000, plus $45,000, or Investors may not invest more than ten percent (10%) of
Missouri no minimum, plus $150,000 liquid net worth.
Pennsylvania $45,000, plus $45,000, or Because the minimum closing amount is less than $3,500,000,
no minimum, and $150,000 Investors are cautioned to carefully evaluate Boston
Capital's ability to fully accomplish its stated objectives
and to inquire as to the current dollar volume of
subscriptions. Pennsylvania investors may not invest more
than ten percent (10%) of net worth in any series, exclusive
of home, home furnishings and automobiles.
Tennessee $45,000, plus $45,000, or Investors may withdraw their subscriptions within five
no minimum, plus $150,000 business days from receipt or confirmation, whichever is
later.
</Table>
Investors in the following states must execute an investor form provided by the
Soliciting Dealer or Dealer-Manager on behalf of Boston Capital: Alabama,
Arizona, Arkansas, California, Iowa, Maine, Massachusetts, Michigan, Minnesota,
Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina,
Oklahoma, Oregon, South Dakota, Texas, Washington and Wisconsin.
8
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY 14
ADDITIONAL SUMMARY INFORMATION FOR CORPORATE INVESTORS 27
ESTIMATED USE OF PROCEEDS 32
RISK FACTORS 34
Tax Risks 34
IRS may challenge Boston Capital's tax positions which could result in
the loss or recapture of tax benefits 34
IRS may audit Boston Capital which might increase the chance that
investors' returns are audited 34
Apartment complexes must adhere to complex rules in order to be eligible
for tax credits 34
If apartment complexes fail to comply with applicable income and rent
restrictions for a 15-year period, previous tax credits received
may be recaptured 35
Under the tax code, investors are limited in what they can deduct from
passive activities so it is possible that investors may not be able
to use all of the tax benefits 35
The restrictions imposed by the alternative minimum tax and business
credit issues may limit the tax liability that can be offset by tax
credits 35
IRS may unfavorably change the allocation of credits and losses 35
Investors may realize taxable gain on sale or disposition of
certificates 36
Investors may have tax liability in excess of cash 36
General Risks 36
Investors will not be able to evaluate all of the apartment complexes
in which the series will invest 36
Boston Associates relies on the expertise of the operating general
partners 36
Sale of less than all certificates may result in fewer investments for
Boston Capital 36
Boston Associates may not be able to buy certificates to fund start up
costs of Boston Capital 37
Investors may not receive cash if apartment complexes are sold 37
A decrease in an individual investor's taxable income will limit his
benefit received from tax credits 37
Investors may not be able to liquidate their investment promptly at a
reasonable price 37
Investors are liable for up to three years for the amount of their returned
contributions to any Boston Capital creditors 38
Investors may have limited rights of action against Boston Associates 38
A series may be liable for the liabilities of other series 38
An independent underwriter will not make an independent investigation
of Boston Capital 39
The price of certificates was arbitrarily established at $10 per
certificate 39
The prohibition on mergers in the Fund Agreement may limit the
operational flexibility of Boston Capital 39
</Table>
9
<Page>
<Table>
<Caption>
PAGE
----
Third party lenders may be able to foreclose on an operating partnership
interest prior to the sale of all of the certificates 40
There is no assurance that legal remedies for breach of fiduciary duties
will be available to investors 40
The interests of investors may conflict with the interests of Boston
Associates 41
Real Estate Risks 41
Occupancy rates in apartment complexes are affected by adverse changes
in the general or local economic conditions 41
If the expenses of apartment complexes are greater than their income,
Boston Capital may have to pay any operating shortfalls 41
Leveraged investments may increase the risk of loss because of the debt
payments 41
Operating general partners have limited financial resources and if they
fail to meet their obligations, Boston Capital may have limited
remedies against them 42
Government regulations regarding apartment complexes receiving
government assistance may limit the flexibility of those complexes
to rent to tenants or increase rents, thereby restricting the economic
benefit of Boston Capital 42
FIDUCIARY RESPONSIBILITY OF BOSTON ASSOCIATES 43
CONFLICTS OF INTEREST 45
Inconsistent Interests 45
Common Management; Selection of Operating Partnership Interests 47
Public Limited Partnerships 47
Other Transactions with Boston Associates or Its Affiliates 48
Expenses 48
Annual Report 49
Services 49
Joint Venture 50
Miscellaneous 50
Employment of Professionals 51
COMPENSATION AND FEES 51
INVESTMENT OBJECTIVES AND ACQUISITION POLICIES 55
Investment Objectives 55
Acquisition Policies 58
Repurchase Events 62
Adjuster Provisions 62
Interim Third Party Loans 63
Loans to Operating Partnerships 63
Capital Contributions 64
Boston Capital's Limited Liability 66
The Operating General Partners 66
Fees and Compensation Arrangements with Operating General Partners and
Their Affiliates 67
Regulatory Restrictions 68
Unused or Returned Funds 68
</Table>
10
<Page>
<Table>
<Caption>
PAGE
----
Preliminary Investments and Reserves 69
Borrowing Policies 70
Other Policies 70
INVESTMENT IN OPERATING PARTNERSHIPS 71
TAX CREDIT PROGRAMS 72
The Tax Credit 72
Summary of the Tax Credit Program 73
Qualified Apartment Complexes 75
Eligible Basis and Qualified Basis 77
Use of the Tax Credit 79
Credits Subject to State Allocation 80
Qualified Allocation Plans 81
Historic Tax Credit 82
GOVERNMENT ASSISTANCE PROGRAMS 83
Rural Housing Service ("RHS") Programs 83
USHUD Mortgage Loan Insurance Programs and Insurance Subsidy Programs 84
USHUD Rental Assistance Programs 88
Rent Supplement Programs 90
Transfer of Physical Assets Procedure 91
Government National Mortgage Association/Federal National Mortgage
Association 91
State and Local Financing Programs 91
HOME Program 93
MANAGEMENT 94
The General Partner 94
Boston Capital Corporation and Its Affiliates 95
PRIOR PERFORMANCE OF BOSTON ASSOCIATES AND ITS AFFILIATES 100
Private Placements (with Similar Investment Objectives) 102
Public Offerings 102
DESCRIPTION OF CERTIFICATES 105
The Certificates 105
Transfers 106
SHARING ARRANGEMENTS: PROFITS, CREDITS, LOSSES, NET
CASH FLOW AND RESIDUALS 108
From Boston Capital to the Investors 109
From the Operating Partnerships to Boston Capital 110
Authority of the Boston Associates to Vary Allocations to Preserve and
Protect Partners' and Investors' Intent 111
Allocations of Profits, Credits and Losses and Cash Distributions
Pending Final Issuance of Certificates 112
FEDERAL INCOME TAX MATTERS 112
General Considerations 112
Brief Overview of Federal Income Tax Considerations 113
</Table>
11
<Page>
<Table>
<Caption>
PAGE
----
Opinions of Counsel 113
Classification as a Partnership 114
Investments in Operating Partnerships 114
Tax Treatment of Electing Large Partnerships 115
Limitations on Use of Credits and Losses 115
Allocation of Fund Income, Gain, Credits and Loss 117
Depreciation 117
Historic Tax Credit and Its Recapture 117
Tax Treatment of Certain Partnership Expenses 118
Sales or Disposition of Operating Partnership Property 118
Sales or Disposition of Certificates 118
Transferability--Termination of Boston Capital 119
Tax Rates and Capital Gains 119
Alternative Minimum Tax 119
Tax Returns and Tax Information 119
Tax Shelter Registration 119
Changes in Tax Law 120
Opinions of Counsel 120
Tax Rates 121
Classification as a Partnership 122
Classification of Investors as Partners for Tax Purposes 124
Fund Allocations and Distributions 124
Federal Housing Tax Credit 134
State Designation of Apartment Complexes 134
Historic Tax Credit 135
Passive Loss and Tax Credit Limitations 137
Individuals 137
Corporations 139
All Taxpayers 140
At-Risk Limitation on Credits and Losses 140
Purchase of Existing Apartment Complexes from Tax-Exempt or
Governmental Entities 142
Investment by Tax-Exempt Entities 143
Recapture of Tax Credits 144
Depreciation 146
Construction Period Expenditures 147
Fees Paid From Capital Contributions or Boston Capital or Operating
Partnership Cash Flow 148
Sale or Disposition of Certificates 149
Sale or Other Disposition of an Apartment Complex and Interests in
Operating Partnerships 151
Excess Investment Interest Limitation 152
Certain Tax Elections 152
IRS Audit Considerations 153
</Table>
12
<Page>
<Table>
<Caption>
PAGE
----
Limitations for Deductions Attributable to Activities Not Engaged in
for Profit 155
Overall Evaluation of Tax Benefits 157
Certain Other Tax Considerations 157
"Tax Shelter" Registration 160
Future Federal Income Tax Legislation and Regulations 160
State and Local Taxes 161
THE OFFERING 161
Selling Arrangements 164
Escrow Arrangements 167
SUMMARY OF PROVISIONS OF THE FUND AGREEMENT 167
Withdrawal of Boston Associates 167
Removal of Boston Associates 168
Liability of Partners and Investors to Third Parties 168
Withdrawal of Capital and Redemption of Investors' Interest 169
Management of Boston Capital 169
Mergers and Rollups 169
Voting Rights and Meetings 169
Amendments to the Fund Agreement 171
Dissolution and Liquidation 171
Tax Election 172
Tax Matters Partner Designation 172
Books and Records 172
Successor in Interest 172
Power of Attorney 172
Applicable Law 173
SALES LITERATURE 173
EXPERTS 173
INVESTOR REPORTS 173
LEGAL MATTERS 174
REGISTRATION STATEMENT 174
GLOSSARY 174
Reports of Independent Certified Public
Accountants, Financial
Statements and Tabular Information
Concerning Prior Limited Partnerships I-1
EXHIBIT A--Fund Agreement A-1
EXHIBIT B--Investor Form B-1
</Table>
13
<Page>
SUMMARY
THIS SUMMARY OUTLINES THE MAIN POINTS OF THE OFFERING, BUT DOES NOT REPLACE A
FULL AND CAREFUL READING OF THIS PROSPECTUS, AND IS QUALIFIED BY THIS
PROSPECTUS. ALL PROSPECTIVE INVESTORS SHOULD READ THIS PROSPECTUS IN ITS
ENTIRETY.
Boston Capital Tax Credit Fund V L.P. ("Boston Capital") is organized as a
limited partnership because that structure allows the pass through of tax
benefits. Each series of certificates issued by Boston Capital assigns
beneficial interests in the limited partner interests allocated to that series
to the purchaser of those certificates. Certificates of beneficial interests are
being issued instead of direct limited partner interests because dealing with
the transfer of the certificates is less cumbersome than dealing with the
transfer of direct limited partner interests. Each series of certificates issued
by Boston Capital is separate from the other series. Each series will have no
material assets other than the amounts raised by this offering and has no
current operating history. The assets of the previous series offered by Boston
Capital are not available to investors in Series 47 or 48. Accordingly, no
financial statements of Boston Capital or its series are provided.
The structure of the investment in Boston Capital involves two tiers. In the
bottom tier is the operating partnership which will be the owner of an apartment
complex. Any tax credits, profits, losses or net cash produced by the operations
of, or sale or refinancing transactions with regard to, an apartment complex for
the operating partnership will be shared between Boston Capital and the general
partners of the operating partnership in percentages to be negotiated between
Boston Capital and each operating partnership. Boston Capital expects that it
will usually receive 99.99% of the tax credits, profits and losses available
from the operating partnership. Boston Capital will allocate 99.75% of the
profits, losses, tax credits it receives and 99.75% of the net cash flow it
has available from operations to the owners of the certificates and 0.25% of
those items will go to the general partner, Boston Capital Associates V
L.L.C. ("Boston Associates").
Net proceeds from sale or refinancing transactions will be split 95% to
investors and 5% to Boston Associates; however, if investors have not received a
return from cash distributions and tax credits equal to 10% per year on a
cumulative basis from the quarter in which they invested, Boston Associates' 5%
share will be subordinated until investors have received enough to meet the
priority return.
14
<Page>
The following organization chart shows the basic structure of the investment and
the identity of the parties:
<Table>
- -------------------------
BOSTON CAPITAL
ASSET MANAGEMENT L.P.
(ASSET MANAGEMENT FEES)
- -------------------------
|
\ /
- --------------------- ------------------- -------------------
BOSTON CAPITAL BOSTON CAPITAL JOHN P. MANNING -------------------
HOLDINGS L.P. ----> CORPORATION ----> (MANAGING MEMBER) INVESTORS
(ACQUISITION FEES) (GENERAL PARTNER) ------------------- -------------------
- --------------------- ------------------- / \ / \ 100% TAX |
/ \ | | CREDITS AND |
| | | ALL PROCEEDS |
- --------------------- --------------------------- | |
BOSTON CAPITAL | | |
SERVICES INC. | 100% PROCEEDS/ | INVESTORS'
(DEALER MANAGER FEES) | 100% TAX BENEFITS | CAPITAL
- --------------------- | | CONTRIBUTIONS
| | |
| CERTIFICATES |
| | |
| INVESTORS' | |
| CAPITAL -------------- CAPITAL | \ /
---------- CONTRIBUTIONS BOSTON CAPITAL CONTRIBUTIONS ------------------
GENERAL ----------------------> TAX CREDIT < --------------------- ASSIGNOR
PARTNER PROCEEDS/ FUND V.L.P. PROCEEDS/ LIMITED PARTNER
BOSTON 0.25% TAX BENEFITS (2) SERIES 99.75% TAX BENEFITS (3) BCTCV
ASSOCIATES < -------------------- 47 & 48 -----------------------> ASSIGNOR CORP.
V.L.L.C. -------------- ------------------
---------- / \ |
| |
| |
PROCEEDS/ | |
99.99% TAX BENEFITS (1)| |CAPITAL CONTRIBUTIONS
| |
| |
LIMITED PARTNER
| |
| |
0.01% TAX | \ /
------------------ BENEFITS (1) -------------
OPERATING < -------------- OPERATING
GENERAL PARTNERS ---------------> PARTNERSHIP
------------------ -------------
CAPITAL CONTRIBUTIONS / \ |
| |
TAX | |
BENEFITS | \ / COST OF APARTMENT COMPLEX
-------------------
APARTMENT COMPLEX
-------------------
</Table>
(1) NET CASH FLOW AND SALE OR REFINANCING PROCEEDS PERCENTAGE TO BE NEGOTIATED.
(2) 0.25% OF TAX CREDITS, PROFITS, LOSSES, NET CASH FLOW; 5% OF NET PROCEEDS
FROM SALE OR REFINANCING TRANSACTIONS AFTER THE PRIORITY RETURN.
(3) 99.75% OF NET CASH FLOW; 95% OF NET PROCEEDS FROM SALE OR REFINANCING
TRANSACTIONS AFTER RECEIVING THE PRIORITY RETURN.
RISK FACTORS
Investors should be aware that an investment in Boston Capital entails risk. The
"Risk Factors" section of this Prospectus contains a detailed discussion of the
material risks.
General risks associated with Boston Capital's investments include:
- - The only benefit of this investment may be tax credits. Investors may not get
their capital back from the sale or refinancing of the apartment complexes.
In such instance, a material portion of the tax credits will represent a
return of the money originally invested in Boston Capital.
- - There is no guarantee that investors will receive tax credits.
15
<Page>
- - Boston Capital will depend upon the ability, integrity and expertise of
Boston Associates, as general partner, in selecting the appropriate mix of
properties.
- - There is no trading market for certificates and there are no assurances that
any market will develop. Accordingly, investors may not be able to sell their
certificates promptly and should therefore consider certificates to be a
long-term investment.
- - Investors will not have the benefit of an independent underwriter's
investigation of Boston Capital because the lead underwriter is an affiliate
of Boston Associates.
Real Estate Risks:
- - If a lender forecloses on an apartment complex that has not timely paid its
mortgage, a significant portion of tax credits previously received will be
taken back.
Tax Risks:
- - The use of tax credits can be limited because of the complicated nature of
the tax credit rules in the Internal Revenue Code. Failure to comply with any
of these complicated rules by an apartment complex could cause the loss
and/or recapture of some of the tax credits.
- - Tax credits are generated over a ten-year period, but Boston Capital intends
to hold the apartment complexes for at least fifteen years. Although
investors are not required to hold their certificates for any particular
period of time, there is no assurance a market will develop and there are
restrictions on their transfer in the agreement of limited partnership.
- - There are significant continuing occupancy requirements that each apartment
complex must comply with for a fifteen-year period after the federal housing
tax credits are first taken. Failure to comply with these requirements could
result in the loss of some tax credits.
- - Tax credits cannot be used to offset alternative minimum tax.
THE OFFERING
Boston Capital is offering certificates in separate series on a best efforts
basis, which means that no specified amount of capital will be raised. The price
of each certificate will be $10. The price of the certificates was arbitrarily
established. Only one series will be offered at a time. Boston Associates and
the Dealer-Manager are responsible for deciding when one series stops and the
next one starts. Boston Capital will separately account for, and issue
information with respect to, each series. No series of certificates will be sold
unless at least 250,000 certificates are sold. Each series will invest in
separate pools of apartment complexes that qualify for tax credits. The
description of the apartment complexes which the current series expects to
invest in are described in the supplement delivered with this Prospectus. The
investment and tax risks for each series will be materially identical.
16
<Page>
THE CERTIFICATES OF DIFFERENT SERIES WILL SHARE IN DIFFERENT POOLS OF OPERATING
PARTNERSHIP INTERESTS AND, THEREFORE, INVESTORS IN DIFFERENT SERIES MIGHT
RECEIVE DIFFERENT RETURNS ON THEIR INVESTMENTS.
Because each series of Boston Capital will be treated as though it were a
separate partnership sharing in a separate and distinct pool of operating
partnership interests and because the purchase of certificates in any one series
will not entitle an investor to any interest in any other series of Boston
Capital, historical financial information regarding Boston Capital, which is
comprised of prior series, is not provided in this Prospectus.
Boston Capital will place initial monies raised in an escrow account until the
$2,500,000 minimum is achieved for each series. During that time, interest will
be earned at savings account rates which is expected to be about 0.65%. The
interest will be paid to the investor even if the minimum is not reached. If
subscriptions for fewer than $2,500,000 have been received by the expiration or
termination of the applicable series offering period, all funds received,
without deduction, will be refunded within 10 days after the expiration or
termination of the applicable series offering period.
Boston Capital will use approximately $0.75 to $0.76 of each dollar raised for
investments in apartment complexes. About one-half of the balance will be used
to pay fees and expenses to Boston Associates or its affiliates. See "Estimated
Use of Proceeds" and "Compensation and Fees" in this Prospectus. The offering of
each series will not exceed twelve months.
SUITABILITY OF AN INVESTMENT IN CERTIFICATES
<Table>
<Caption>
CONSIDERATIONS FOR CONSIDERATIONS FOR
INDIVIDUAL INVESTORS CORPORATE INVESTORS
- --------------------------------------- ---------------------------------------
- - individuals should invest in tax - tax credits cannot be used against
credits only if they expect to have the corporate alternative minimum
income taxes which the tax credits tax.
can offset.
- - tax credits cannot be used against - the general limitations on business
the alternative minimum tax. tax credits apply.
- - tax credits cannot be used in IRA, - corporations generally have no
Keogh or other retirement plans. limits on the amount of tax credits
and passive losses they may use each
- - non-resident aliens cannot use tax year.
credits.
- - married persons filing separately - closely held, personal service and S
and living together in any year may Corporations are specially limited
not use tax credits against taxes in their use of tax credits.
owed in that year on income derived
from wages, salaries, dividends or
interest income.
</Table>
17
<Page>
See "Suitability of an Investment in Certificates" for a detailed explanation of
these limitations for each category of investor and a description of the minimum
net worth and income requirements that various states impose on investors.
ESTIMATED USE OF PROCEEDS
We will use the proceeds in the following way:
- - invest approximately $0.75 to $0.76 of each dollar we raise directly in
constructing or rehabilitating the apartment complexes;
- - hold $0.04 of each dollar in working capital reserves;
- - use the rest to pay fees and expenses to Boston Associates and others. See
"Estimated Use of Proceeds" for a detailed breakdown of Boston Capital's
estimate of the use of the capital it raises.
FIDUCIARY RESPONSIBILITY OF BOSTON ASSOCIATES
Boston Associates will act as a fiduciary to Boston Capital. Boston Capital will
partially indemnify Boston Associates, and therefore may be required to pay some
of Boston Associates' business costs in connection with its operation of Boston
Capital that Boston Capital would not otherwise be required to pay. As described
under "Conflicts of Interest," Boston Associates will be permitted to engage in
some activities that potentially may involve a conflict of interest, such as
sponsoring other programs investing in apartment complexes that generate tax
credits without providing the benefits of those activities to Boston Capital
investors.
CONFLICTS OF INTEREST
The interests of investors may conflict with the interests of Boston Associates.
Its affiliates are committed to the management of many other limited
partnerships that have investments similar to those made by Boston Capital. As
described in the chart on the following page, Boston Associates, Boston Capital
Services Inc., Boston Capital Holdings Limited Partnership, and Boston Capital
Asset Management Limited Partnership will receive substantial fees, commissions,
compensation and other income from transactions with and by Boston Capital
regardless of the success of your investment.
COMPENSATION AND FEES
Boston Associates will manage the business of Boston Capital, including the
investment and management of its assets, and will receive substantial
compensation and fees from Boston Capital and/or the apartment complexes in
connection with this offering. The section of this Prospectus
18
<Page>
entitled "Compensation and Fees" specifies the compensation payable to Boston
Associates and its affiliates. The most significant items of compensation are as
follows:
<Table>
<Caption>
COMPENSATION WHO RECEIVES THE WHAT THE COMPENSATION
CATEGORY COMPENSATION EQUALS
- ---------------------------------------- ---------------------------------------- ----------------------------------------
Reimbursement for Non-Accountable Boston Associates
Expenses (Organizational Phase) - equal to accountable and
non-accountable expenses paid to
Boston Associates for due diligence
expenses and administrative costs
related to the offering.
- up to $0.10 per certificate (1%)
sold.
- could be up to $25,000 if $2,500,000
is raised and $350,000 if $35,000,000
is raised.
Dealer-Manager Fee Boston Capital Services, Inc. - equal to $0.20 per certificate sold.
(Organizational Phase)
- also may receive selling commissions
of up to $0.70 per certificate sold.
- also may receive accountable and
non-accountable due diligence expense
reimbursements of up to $0.15 per
certificate sold.
- could be about $262,500 if $2,500,000
is raised and $3,675,000 if
$35,000,000 is raised.
</Table>
19
<Page>
<Table>
<Caption>
COMPENSATION WHO RECEIVES THE WHAT THE COMPENSATION
CATEGORY COMPENSATION EQUALS
- ---------------------------------------- ---------------------------------------- ----------------------------------------
Asset Acquisition Fee (Organizational Boston Capital Holdings Limited - equal to $0.64 per certificate sold
Phase) Partnership as a fee for selecting, evaluating,
negotiating and closing series'
investments in apartment complexes.
- could be about $135,000 if $2,500,000
is raised and $1,890,000 if
$35,000,000 is raised.
Annual Fund Management and Reporting Boston Capital Asset Management Limited - annually equal to 0.5% of the
Fees (Operational Phase) Partnership aggregate cost of the apartment
complexes, which is the sum of equity
invested by Boston Capital in the
apartment complex plus the amount of
mortgage debt on the apartment
complex. This fee is for managing the
investments of Boston Capital and
reporting services to investors.
- could be about $36,000 per year if
$2,500,000 is raised and $504,000 if
$35,000,000 is raised.
Share of Boston Capital Distributions Boston Associates - 0.25% of tax credits;
(Liquidation Phase)
- 0.25% of any cash distributions;
- 5% of net proceeds of the sale of the
apartment complexes.
</Table>
20
<Page>
INVESTMENT OBJECTIVES AND ACQUISITION POLICIES
Boston Capital's principal business is to invest, as a limited partner, in other
limited partnerships (the "Operating Partnerships"), each of which will develop,
own and operate an apartment complex which is expected to qualify for tax
credits in order to:
(1) GENERATE TAX CREDITS, WHICH CAN BE USED BY INVESTORS TO OFFSET FEDERAL
INCOME TAXES FROM ALL SOURCES. These tax credits include federal housing tax
credits, and a small number of historic tax credits in limited instances.
Occupancy requirements must be met for each apartment complex during the initial
fifteen-year period.
(2) PRESERVE AND PROTECT INVESTORS' CAPITAL. Boston Capital requires the general
partners of the Operating Partnerships to:
- - guarantee completion of the apartment complex;
- - fund any construction cost overruns;
- - pay operating shortfalls for a limited period;
- - guarantee a specific amount of tax credits.
(3) PROVIDE TAX BENEFITS IN THE FORM OF PASSIVE LOSSES. Individual investors
generally may deduct tax losses only to the extent of their income other than
wages, salaries, dividends and interest.
(4) DISTRIBUTE NET CASH, IF ANY, FROM THE SALE OR REFINANCING OF APARTMENT
COMPLEXES. Investors can get money back from the sale or refinancing of an
apartment complex equal to their original investment only if the net sales price
is large enough to pay fees and expenses paid in this offering, estimated to be
25% of your initial investment, plus all costs of the sale of the apartment
complexes.
21
<Page>
The attainment of Boston Capital's investment objectives will depend on many
factors, including the ability of Boston Associates to select suitable
investments on a timely basis, the timely completion and successful management
of such investments and future economic conditions in the United States.
Accordingly, there can be no assurance that Boston Capital will meet its
investment objectives.
BOSTON CAPITAL AND INVESTOR PROTECTIONS
Boston Capital will try to protect your investment in a number of ways. First,
each series will invest its capital in each apartment complex in stages based on
completion of construction, rental of apartments to qualified tenants and
demonstrated experience in covering operating costs through rental income. In
this way Boston Capital will try to put as little capital at risk as possible in
the stages of an apartment complex's life cycle that are most uncertain.
Second, Boston Capital's permission will be required to make major decisions,
such as the decision to sell an apartment complex. Other specific protections
are as follows:
TAX CREDIT ADJUSTER. If the amount of tax credits achieved by an apartment
complex is less than expected, Boston Capital will decrease its capital
contribution to that apartment complex. Decreasing its capital contribution
22
<Page>
to one apartment complex may increase its effective return and may allow Boston
Capital to buy other tax credits from another apartment complex.
CONSTRUCTION GUARANTEES. The operating general partner(s) will provide financial
assurances that construction of the apartment complex will be completed in a
timely manner and in accordance with all requirements necessary to obtain the
required certificates of occupancy. The cost of completing the construction may
be greater than the operating general partner's guarantee.
OPERATING DEFICIT GUARANTEES. The operating general partner(s) may guarantee to
cover operating expenses arising from the operation of each apartment complex.
The amount of such operating deficit guarantees may, in some instances, be
limited to a specified term and/or dollar amount.
REPURCHASE OF OPERATING PARTNERSHIP INTEREST. The operating general partner(s)
must repay Boston Capital's capital contributions if the apartment complex fails
to: (1) receive the allocation of tax credits; (2) remain eligible for tax
credits during the period when capital contributions of Boston Capital are due
to the operating partnership; or (3) obtain permanent mortgage loan financing.
TAX CREDIT PROGRAMS
Section 42 of the tax code offers tax credits to encourage investments in
qualified apartment complexes for use by persons of low and moderate income. The
U.S. Bureau of Census estimates that in the year 2000, there was an unmet
national demand for five million units of affordable rental housing.
The tax code has prefunded federal housing tax credits since 1987 and since
2002, will make available to eligible properties up to $4.9 billion of federal
housing tax credits annually. In 1993, Congress passed permanent legislation
that annually funds this ten-year tax credit allocation for additional tax
credit properties. The allocation of tax credits to a particular building is for
the full ten-year credit period and no reauthorization of the tax credit program
is required for any such existing allocation of tax credits.
Investors in a partnership that owns an apartment complex are eligible to
receive, for a ten-year period, a credit against federal tax liability. A tax
credit is a dollar-for-dollar reduction in tax liability, while a tax deduction
is a subtraction from adjusted gross income. The laws and rules authorizing tax
credits defined:
- - the types of apartment complexes that qualify for the federal housing tax
credit;
- - the income attributes of tenants that must live in the apartment complex;
- - the rents the tenants may be charged and costs of construction or renovation
of the apartment complexes.
These rules are complicated and must be followed for investors to receive tax
credits, and are described in the section of this Prospectus entitled "Tax
Credit Programs."
23
<Page>
Because tax credits do not reduce a taxpayer's basis, a taxpayer's gain upon the
sale or other disposition of certificates is not increased by the allowed tax
credits.
The federal housing tax credit program requires that its rules be complied with
during the fifteen-year period after tax credits are first taken. To the extent
the tax credit rules are not adhered to during the fifteen-year period,
investors would have to repay a portion of the tax credits previously generated
by the non-complying dwelling units in the applicable apartment complex. See
"Tax Credit Programs--The Federal Housing Tax Credit."
Investors may use the increased cash flow from the use of tax credits to make
other investments such as dollar cost averaging into mutual funds, saving for
retirement or future college expenses, funding life insurance expenses or simply
diversifying a tax advantaged or conventional investment portfolio. The tax
credit benefit itself also may be used to offset the tax liability arising from
retirement plan withdrawals or used to reduce quarterly estimated tax payments.
MANAGEMENT
Boston Capital maintains its principal office c/o Boston Capital Corporation,
Inc., One Boston Place, Suite 2100, Boston, Massachusetts 02108-4406, telephone
(617) 624-8900.
The general partner of Boston Capital Tax Credit Fund V L.P. is Boston Capital
Associates V L.L.C. ("Boston Associates"), a Delaware limited liability company.
The managing member of Boston Associates is John P. Manning. The business
address of Boston Associates is the same as that of Boston Capital.
Boston Associates has complete authority in the overall management and operation
of each series and will have responsibility for supervising Boston Capital's
selection, negotiation and investment in apartment complexes.
PRIOR PERFORMANCE OF BOSTON ASSOCIATES
AND ITS AFFILIATES
Affiliates of Boston Capital have raised approximately $3.0 billion in real
estate equity from approximately 80,000 investors in more than 374 investment
programs to acquire interests in approximately 2,350 properties containing
approximately 112,000 apartment units and 90 commercial buildings in 48 states
and territories, representing approximately $8.47 billion in original
development and acquisition costs.
The section of this Prospectus entitled "Prior Performance of Boston Associates
and Its Affiliates" contains a discussion of the prior real estate investment
programs in which Boston Associates' affiliates have been involved and it is not
intended as an assurance of future performance. The Prior Performance Tables
attached to this Prospectus following the Financial Statements contain tabular
and statistical data regarding the prior
24
<Page>
investment programs of Boston Associates' affiliates that have invested in
low-income and government-assisted housing.
DESCRIPTION OF CERTIFICATES
Investors will invest in certificates, representing assignments of units of the
beneficial interest of Boston Capital issued to BCTC V Assignor Corp., a
Delaware corporation that is owned by Manning (the "Assignor Limited Partner").
The Assignor Limited Partner was formed for the purpose of serving in that
capacity for Boston Capital and will not engage in any other business. Investors
will be entitled to all the rights and economic benefits of a limited partner of
Boston Capital, including the rights to a percentage of Boston Capital's income,
gain, credits, losses, deductions and distributions. No investor will be
personally liable for the debts, liabilities, contracts or other obligations of
Boston Capital. See "Summary of Provisions of the Fund Agreement-Liability of
Partners and Investors to Third Parties." Investors will be bound by the terms
of the Fund Agreement of Limited Partnership. The Assignor Limited Partner
agrees that on any matter calling for a vote of the limited partners, it will
vote the assigned limited partnership interests only if and as directed by the
investors.
We anticipate the certificates to be transferable, subject to some restrictions.
No more than 50% of the certificates will be permitted to be transferred in any
twelve-month period. This prevents any potential recapture of tax credits upon
the transfer of certificates. See "Description of Certificates," "Risk
Factors--Certain Other Risks--Transferability" and "Federal Income Tax
Matters--Recapture of Tax Credits." We will identify each certificate as
representing a particular series.
SHARING ARRANGEMENTS: PROFITS, CREDITS, LOSSES
NET CASH FLOW AND RESIDUALS
Boston Capital will allocate or distribute, as applicable, to the investors:
- - 99.75% of its tax credits and tax losses from normal operations;
- - 99.75% of its cash generated after all expenses are paid, if any.
The remaining amount will go to Boston Associates provided that Boston
Associates' distribution of cash will be subordinated to the achievement of the
priority return to investors.
From Boston Capital to investors, if there is a sale or refinancing of an
apartment complex or the sale of Boston Capital's interest in an operating
partnership, Boston Capital will distribute 95% of the proceeds to the
investors, and 5% of the proceeds to Boston Associates; provided that Boston
Associates' distribution will be subordinated to the achievement of the priority
return to investors.
25
<Page>
FEDERAL INCOME TAX MATTERS
The section of this Prospectus entitled "Federal Income Tax Matters" contains a
more detailed discussion of the numerous federal income tax issues already
mentioned in this Summary. It is expected that each purchaser of a certificate
(1) will be treated as a partner for federal income tax purposes; and (2) will
be entitled to its allocable share of the tax credits, profits and losses from
the respective series. It is also expected that federal income tax will be
imposed only at the partner level with regard to an investment in Boston Capital
avoiding the double taxation applicable to corporations. The "Federal Income Tax
Matters" section of this Prospectus also contains the legal opinions of Nixon
Peabody LLP as to all material federal income tax matters with respect to an
investment in Boston Capital. See pages 120 through 121 of this Prospectus for a
summarization of the precise nature of the legal opinions being given with
respect to these matters.
SUMMARY OF PROVISIONS OF THE FUND AGREEMENT
The Fund Agreement that will govern the relationship between investors and
Boston Associates is a legal document, described in the section of this
Prospectus entitled "Summary of Provisions of the Fund Agreement." Other
important portions of the Fund Agreement are summarized under "Sharing
Arrangements: Profits, Credits, Losses, Net Cash Flow and Residuals" and
"Description of Certificates."
Investors should particularly be aware of the following terms of the Fund
Agreement:
- - VOTING RIGHTS. The Fund Agreement gives a majority of certificates the right
to:
(1) approve or disapprove the sale of all or substantially all of the assets
of a series at any one time;
(2) amend the Fund Agreement, subject to important limitations;
(3) remove Boston Associates with or without cause and elect a replacement;
(4) dissolve Boston Capital.
The majority vote of each series will still bind investors who do not vote with
the majority in interest of their fellow investors.
- - CHANGES IN THE RIGHTS OF INVESTORS.
The Fund Agreement may not be amended to:
(1) alter the rights and obligations of each investor under the Fund
Agreement;
(2) modify the order of distributions or allocations of tax credits or cash
distributions without the approval of any affected investor.
26
<Page>
- - CHANGES IN INVESTMENT OBJECTIVES AND POLICIES. Boston Associates cannot
change the investment objectives or policies of a series unless the Fund
Agreement is amended by the approval of a majority in interest of the
investors in that series. If such an amendment is made, the majority vote
will still bind investors who do not vote with the majority in interest of
their fellow investors.
- - MERGERS AND ROLLUPS. The Fund Agreement specifically prohibits the merger or
combination of Boston Capital with any other entity.
Under the Revised Uniform Limited Partnership Act as enacted in the State of
Delaware, a limited partner in a limited partnership is liable only for the
amount of the capital contributions that the limited partner agrees to make.
If a limited partner does not participate in the management of a partnership and
does not receive a distribution from the limited partnership, the limited
partner will have no additional financial liability to the limited partnership
or to creditors of the limited partnership. All rights accorded limited partners
in a limited partnership under the laws of the State of Delaware extend to
investors under the terms of the Fund Agreement.
INVESTOR REPORTS
Each investor will receive:
- - an acknowledgment of receipt of the investment;
- - a letter after the applicable Closing Date, confirming the assignment of
certificates;
- - quarterly reports with unaudited financial information for each of the first
three fiscal quarters of each year;
- - annual reports with audited financial statements;
- - Schedule K-1 and other necessary tax information.
EXPERTS
Counsel for Boston Capital is: Accountants for Boston Capital are:
Nixon Peabody LLP Reznick Fedder & Silverman
401 9th Street, N.W. 7700 Old Georgetown Rd.,
Washington, D.C. 20004 Suite 400
Bethesda, Maryland 20814
ADDITIONAL SUMMARY INFORMATION FOR
CORPORATE INVESTORS
An investment in Boston Capital may enable C Corporations to reduce current
taxes due, increase cash flow and increase net income for the purposes of
financial reporting.
If the cost method of accounting is available to an investor, the investment in
certificates would be carried as an asset on its balance sheet. The passive
losses would not be recorded for the purposes of financial reporting.
27
<Page>
USE OF LOSSES AND CREDITS
Generally, there are no special limitations on a corporation's ability to use
either tax credits or passive losses to reduce its taxes on all sources of
income, including active income, passive income and portfolio income, except for
specific rules applicable to the use of all business tax credits and except in
the case of closely held corporations and personal service corporations. Closely
held corporations may not use tax credits and passive losses to reduce taxes on
portfolio income, but may reduce taxes on active and passive income. Generally,
personal service corporations will be allowed to use tax credits and passive
losses to reduce taxes only on passive income. Because a corporation subject to
Subchapter S of the tax code is treated as a pass-through entity for federal tax
purposes, each shareholder is generally subject to the limitations on the use of
tax credits and passive losses which apply to individuals. See "Federal Income
Tax Matters--Passive Loss and Tax Credit Limitations" and "Suitability of an
Investment in Certificates."
In computing alternative minimum tax, losses and credits from passive activities
may be used only to offset income from passive activities of a taxpayer. See
"Federal Income Tax Matters--Other Tax Considerations--Alternative Minimum Tax."
INCOME STATEMENT AND BALANCE SHEET EXAMPLE
Assume a C Corporation makes an investment of $1,000,000 in a series and Boston
Capital allocates to the C Corporation $100,000 of tax credits and $60,000 of
losses. Further, assume that the cost method of accounting is available to the
corporation for its investment in the series. Such investment and allocations
would have a number of effects upon the income statement and the balance sheet
of the corporation. The following chart illustrates the expected principal
effects:
<Table>
<Caption>
INCOME STATEMENT BALANCE SHEET
- --------------------------------------- ---------------------------------------
- - income tax liability can be reduced - current assets would increase by
by up to $97,500--$102,500 of $121,000 because of the increase in
credits (assuming 9.75%--10.25% cash flow caused by the reduction in
annual tax credit as a percentage of tax liability;
capital invested for the ten-year
credit period) plus 35% of the - the $1,000,000 investment would
$60,000 of losses--if the reduce current assets, but increase
corporation can fully use both long term investment by the same
losses at a 35% marginal rate and amount;
credits;
</Table>
28
<Page>
<Table>
<Caption>
INCOME STATEMENT BALANCE SHEET
- --------------------------------------- ---------------------------------------
- - the use of tax credits does not - under the cost method of accounting,
create a deferred tax liability and, the investment is shown at cost and
consequently, does affect net income is not reduced by losses; therefore,
to the extent that the tax credits the use of losses does not affect
are used, thereby increasing net income for financial reporting
earnings per share; purposes;
- - the use of losses creates a deferred - the deferred income tax liability of
tax liability and, consequently, $21,000 is recorded as a liability;
does not affect net income because
the reduction in current tax - depending upon the corporation's
liability is exactly offset by dividend policies, an increase in
deferred tax liability. net earnings could increase retained
earnings by $102,500--the amount of
tax credits.
</Table>
Such an investment would likely have other effects on the income statement of a
corporation. For example, if the corporation were to liquidate short-term
investments such as certificates of deposit in order to generate funds to invest
in Boston Capital, the income from such investments would no longer be
available. While this would reduce the corporation's tax liability by the amount
of tax on the foregone income from such investments, it would also reduce net
income and earnings per share by the amount of foregone net after-tax income
from such investments.
The example above assumes that the corporation is not a closely held
corporation, a personal service corporation or a corporation subject to
Subchapter S of the tax code which would limit their use of losses and credits
from passive activities. Moreover, the above example assumes that the
corporation is not subject to the alternative minimum tax or the limitations on
the use of business tax credits, and that the corporation has sufficient tax
liability to use the full amount of the tax credits and losses from passive
activities.
The example above is presented for illustrative purposes only and should not be
deemed a projection or representation with respect to the amount, availability,
or timing of any benefit arising from an investment in certificates. The example
above is not intended to be a complete discussion of all of the possible income
tax effects or financial statement effects of the situation described. Each
potential corporate investor is strongly advised to consult its own tax advisor
regarding the effect of an investment in Boston Capital.
29
<Page>
CONSIDERATIONS FOR CORPORATE INVESTORS
<Table>
<Caption>
CLOSELY HELD PERSONAL SERVICE
C-CORPORATIONS CORPORATIONS CORPORATIONS
------------------------------ ------------------------------ ------------------------------
Definition - not subject to Subchapter S - more than 50% owned, by - principal activity is the
of the tax code. value directly or performance of personal
indirectly, by five or services by a corporation's
fewer individuals, using employees/owners.
the rules of ownership
attribution, at any time
during the last half of the
relevant taxable year.
Income offset by tax credits - income from all sources. - active or passive income, - passive income.
and losses excluding portfolio income.
Time frame that you must - ten to twelve years after - ten to twelve years after - ten to twelve years after
reasonably expect to have your investment in your investment in your investment in
appropriate income to offset certificates. certificates. certificates.
</Table>
30
<Page>
PRIVACY NOTICE
SEC Regulation S-P requires that financial institutions such as Boston
Capital Corporation provide its consumer customers with written notice of its
policies and procedures for disclosure of its customers' nonpublic personal
information.
Investors should be aware of the following policies relating to disclosure of
their nonpublic personal information:
1. Boston Capital collects nonpublic personal information about investors from
the following sources:
- - Information received from an investor on applications or other forms;
- - Information about your transactions with Boston Capital, its affiliates, or
others.
2. Boston Capital does not disclose any nonpublic personal information about its
investors or former investors to anyone, except as permitted by law.
3. Boston Capital restricts access to nonpublic personal information about
investors to those employees who need to know that information to provide
products or services to investors.
4. Boston Capital maintains physical, electronic, and procedural safeguards that
comply with federal standards to guard investors' nonpublic personal
information.
If an investor has any questions about these policies or the use, maintenance
and disclosure of the investors' nonpublic personal information, please contact
Boston Capital Corporation at 800-955-2733.
31
<Page>
ESTIMATED USE OF PROCEEDS
The proceeds of the offering will provide all of the working capital, without
which each series will not be able to achieve its investment objectives. The
following table sets forth the estimated use of the sum of the proceeds of the
sale of certificates for each series. These figures represent Boston Capital's
present estimates; the actual figures may differ. We will use the proceeds in
the following way:
- - invest approximately $0.75 to $0.76 of each dollar we raise directly in
constructing or rehabilitating the apartment complexes;
- - hold $0.04 of each dollar in working capital reserves;
- - use the rest to pay fees and expenses to Boston Associates and others.
Boston Capital will hold all proceeds of the offering in trust for the benefit
of the investors to be used only for the purposes set forth below.
<Table>
<Caption>
MINIMUM MAXIMUM
DOLLAR DOLLAR
AMOUNT PERCENTAGE AMOUNT PERCENTAGE
------ ---------- ------ ----------
Gross Offering Proceeds
per series $ 2,500,000 100.0% $ 35,000,000 100.0%
============ ============ ============ ============
Less Public Offering
Expenses:
Selling Commissions (1) $ 175,000 7.0% $ 2,450,000 7.0%
Dealer-Manager Fee (2) 87,500 2.0% 1,225,000 3.5%
Organization and
Offering Expenses (3) 75,000 3.0% 700,000 2.0%
Total Offering Expenses 337,500 13.5% 4,375,000 12.5%
------------ ------------ ------------ ------------
Amount Available after
Offering Expenses: $ 2,162,500 86.5% $ 30,625,000 87.5%
============ ============ ============ ============
Acquisition Expenses (4) 50,000 2.0% 700,000 2.0%
Asset Acquisition Fee (4) 160,000 6.4% 2,240,000 6.4%
Working Capital Reserve (5) 100,000 4.0% 1,400,000 4.0%
------------ ------------ ------------ ------------
Capital Contributions to
Operating Partnerships (6) $ 1,852,500 74.1% $ 26,285,000 75.1%
============ ============ ============ ============
</Table>
32
<Page>
- ----------
(1) Selling Commissions of up to 7% payable to brokers, most of whom are not
affiliated with Boston Capital. See "The Offering--Selling Arrangements."
(2) Includes the Dealer-Manager Fee of 2.0% of total offering proceeds, plus
an accountable expense reimbursement to the Dealer-Manager in the amount of
up to 0.5% of total offering proceeds, which is to be reallocated to
non-affiliates, and a non-accountable expense allowance to the
Dealer-Manager in the amount of up to 1.0% of total offering proceeds to
be paid to the Dealer-Manager and its affiliates, as described under the
caption "The Offering--Selling Arrangements."
(3) Includes among others legal, accounting, escrow, printing, travel,
marketing, registration, qualification, distribution, filing and other
accountable expenses paid by the series directly, or in connection with the
organization of the series, the structuring of the series' investments and
the offering of certificates. If actual organization and operating expenses
exceed these estimates, they will still be paid from the offering proceeds;
provided, however, if the organization and offering expenses and the
selling commissions exceed 15% of the total offering proceeds, the excess
will be paid by Boston Associates and not the series.
(4) Consists of legal and accounting fees and travel, communication and other
expenses to be paid to third parties and amounts to be paid to Boston
Associates for selecting, evaluating, negotiating and closing the series
investments in apartment complexes. Acquisition expenses do not include,
and Boston Capital will not incur, any expenses for mortgage origination
and real estate brokerage fees from the proceeds of the offering.
(5) Money in the working capital reserve will be available for contingencies
relating to the operation, management and administration of the apartment
complexes, operating partnerships and Boston Capital, including payment of
the annual Fund Management Fee, to the extent other funds are not so
available. In addition, funds held in the working capital reserve can be
used for option and/or other payments and interest expense incurred to
secure the acquisition of apartment complexes.
(6) At a minimum, the amount of offering proceeds which will be invested in
apartment complexes will be the greater of: (1) 82.5% of the total offering
proceeds reduced by 0.1625% for each 1% of financing encumbering the
apartment complexes, or (2) 69.5% of the total offering proceeds. It is
anticipated that each apartment complex will be leveraged with significant
mortgage debt.
33
<Page>
RISK FACTORS
Investing in certificates involves various risks. Therefore, prospective
investors should consider, in addition to the matters set forth elsewhere in
this Prospectus, the following risk factors before making a decision to purchase
certificates.
TAX RISKS
IRS MAY CHALLENGE BOSTON CAPITAL'S TAX POSITIONS WHICH COULD RESULT IN THE LOSS
OR RECAPTURE OF TAX BENEFITS. Boston Capital will not request any tax rulings
from the IRS. Thus, there is no certainty as to the tax consequences of
investing in Boston Capital. Nixon Peabody LLP, counsel to Boston Capital and
Boston Associates, provides its legal opinion with regard to many of the
material tax issues involved in investing in Boston Capital. However, Nixon
Peabody LLP's opinion does not cover some material tax issues because those
issues depend upon the specific investments made by Boston Capital which have
not yet been identified. Nixon Peabody LLP's opinion is not binding on the IRS
or on any court. It is possible that the IRS will challenge tax deductions and
tax credits Boston Capital claims. If such a challenge is successful, it will
have a material and adverse effect on the tax benefits expected from an
investment in Boston Capital. Each investor is urged to speak with his or her
own tax advisor with respect to the federal and state tax consequences from an
investment in Boston Capital.
IRS MAY AUDIT BOSTON CAPITAL WHICH MIGHT INCREASE THE CHANCE THAT INVESTORS'
RETURNS ARE AUDITED. The IRS may audit the income tax returns of Boston Capital
and the operating partnerships. In fact, the IRS has audited thirty three
limited partnerships of a total of more than 1,098 such limited partnerships
with which affiliates of Boston Capital are associated. Twenty-eight of these
audits have been settled with the IRS without material changes and five are
still pending. If the income tax returns of Boston Capital or an operating
partnership are audited, the returns of investors also may be audited.
APARTMENT COMPLEXES MUST ADHERE TO COMPLEX RULES IN ORDER TO BE ELIGIBLE FOR TAX
CREDITS. In order for an investor to receive tax credits, the apartment
complexes must satisfy the complex rules for the federal housing tax credit and,
in some cases, the historic tax credit. The rules that determine whether an
apartment complex is eligible for tax credits and the rules regarding the use of
tax credits are complicated. The tax credits are generated during ten to twelve
years of an investment in each apartment complex, with a smaller amount
typically generated in the initial and final years. Therefore, investors must
reasonably expect to owe federal income taxes for each of the next twelve years
against which tax credits can be used. If an apartment complex is not built on
time, or fails to meet applicable income and rent restrictions, it will not
generate any tax credits. Typically, Boston Capital invests in an apartment
complex before construction has been completed and before the apartment complex
has been rented.
34
<Page>
IF APARTMENT COMPLEXES FAIL TO COMPLY WITH APPLICABLE INCOME AND RENT
RESTRICTIONS FOR A 15-YEAR PERIOD, PREVIOUS TAX CREDITS RECEIVED MAY BE
RECAPTURED. Even though tax credits are generated during a ten to twelve-year
period, the apartment complex must satisfy the applicable income and rent
restrictions during an initial fifteen-year compliance period. If an apartment
complex fails to satisfy the applicable income and rent restrictions at any time
during the initial fifteen-year tax credit compliance period, there will be a
recapture of a portion of the tax credits and a loss of tax credits for the year
the failure took place and for future years. In addition, if Boston Capital
sells its interest in an apartment complex during the initial fifteen-year
compliance period, a portion of tax credits previously received could be
recaptured. Prior to investing in any apartment complex, Boston Capital will
require legal opinions that state, based on specific assumptions, that investors
will be entitled to the tax benefits from the apartment complex owned by the
operating partnership.
UNDER THE TAX CODE, INVESTORS ARE LIMITED IN WHAT THEY CAN DEDUCT FROM PASSIVE
ACTIVITIES SO IT IS POSSIBLE THAT INVESTORS MAY NOT BE ABLE TO USE ALL OF THE
TAX BENEFITS. The tax credits and losses allocated to investors will be "passive
activity credits and losses" and may be deducted by investors only to the extent
of their income from other passive activities or tax on net passive income,
except in some limited circumstances. Individual taxpayers may use tax credits
from passive activities to offset certain amounts of tax liability from
non-passive sources. Individuals can utilize tax credits to offset taxes on up
to $25,000 of active or portfolio income. Thus, an individual taxed at the 28%
tax rate could use tax credits to offset $7,000 (28% X $25,000) in taxes on such
income, and an individual taxed at the 33% or 35% tax rate could use tax credits
to offset $8,250 and $8,750, respectively, in taxes on such income.
THE RESTRICTIONS IMPOSED BY THE ALTERNATIVE MINIMUM TAX AND BUSINESS TAX CREDIT
ISSUES MAY LIMIT THE TAX LIABILITY THAT CAN BE OFFSET BY TAX CREDITS. Tax
credits are subject to an IRS rule governing general business credits that
limits the amount of tax liability that may be offset. Also, neither federal
housing tax credits nor historic tax credits can be used to reduce any liability
for the alternative minimum tax.
IRS MAY UNFAVORABLY CHANGE THE ALLOCATION OF CREDITS AND LOSSES. Boston Capital
will allocate 99.75% of all of its profits, credits and losses. If the IRS
audits Boston Capital, it may try to reallocate profits, credits and losses
in a manner less favorable to the investors. In the opinion of Nixon Peabody
LLP, Boston Capital's attorneys, if the matter were litigated, it is more
likely than not that the allocations will be respected. See "Federal Income
Tax Matters--Allocation of Profits, Credits, Losses, and Other Items in
Accordance with Fund Agreements" and "Calculation of Investor's Basis in His
Certificates or Fund Interests" and "Sharing Arrangements: Profits, Credits,
Losses, Net Cash Flow and Residuals."
35
<Page>
INVESTORS MAY REALIZE TAXABLE GAIN ON SALE OR DISPOSITION OF CERTIFICATES. Upon
the sale or other taxable disposition of certificates, investors will realize
taxable income to the extent that their allocable share of the nonrecourse
mortgage indebtedness on the apartment complexes, together with the money they
receive from the sale of the certificates, is greater than the original cost of
their certificates. This realized taxable income is reduced to the extent that
investors have suspended passive losses or credits. It is possible that the sale
of certificates may not generate enough cash to pay the tax obligations arising
from the sale. See "Federal Income Tax Matters--Depreciation," "--Sale of Fund
Interests" and "--Certain Other Tax Considerations--Alternative Minimum Tax."
INVESTORS MAY HAVE TAX LIABILITY IN EXCESS OF CASH. Investors eventually may be
allocated profits for tax purposes which exceed any cash Boston Capital
distributes to them. Under these circumstances, unless an investor has passive
losses or credits to reduce such tax liability, the investor will have to pay
federal income tax without a corresponding cash distribution from Boston
Capital. Similarly, in the event of a sale or foreclosure of an apartment
complex or a sale of certificates, an investor may be allocated taxable income,
resulting in tax liability, in excess of any cash distributed to him or her as a
result of such event. See "Federal Income Tax Matters--Sale or Disposition of
Certificates" and "--Sale or Other Disposition of an Apartment Complex and
Interests in Operating Partnerships."
GENERAL RISKS
INVESTORS WILL NOT BE ABLE TO EVALUATE ALL OF THE APARTMENT COMPLEXES IN WHICH
THE SERIES WILL INVEST. Boston Associates has not yet identified all of the
apartment complexes in which the series will invest. Investors must rely on the
ability of Boston Associates to find suitable investments for Boston Capital.
All of Boston Capital's investments are required to meet Boston Capital's
investment objectives and acquisition policies, as described in the section of
this Prospectus entitled "Investment Objectives and Acquisition Policies."
Boston Capital does not guarantee that it will be able to find investments
meeting its investment objectives or that any investment it does make will
generate income for investors or increase in value over time.
BOSTON ASSOCIATES RELIES ON THE EXPERTISE OF THE OPERATING GENERAL PARTNERS. The
sustained flow of tax credits is dependent upon the expertise of the operating
general partners and their affiliates to construct, develop, and manage the
apartment complexes. Boston Associates relies on this expertise in finding
suitable investments for Boston Capital. In return, the operating general
partners and their affiliates receive fees, such as development fees and
property management fees.
SALE OF LESS THAN ALL CERTIFICATES MAY RESULT IN FEWER INVESTMENTS FOR BOSTON
CAPITAL. The more certificates that are sold, the more money Boston
36
<Page>
Capital will have to invest in apartment complexes. If fewer than all of the
certificates in any series are sold, Boston Capital will invest in fewer
apartment complexes. The fewer the apartment complexes Boston Capital invests
in, the less diversified its portfolio of apartment complexes will be. Also if
Boston Capital invests in several apartment complexes in the same geographic
area, there will be less diversity. In such circumstances, apartment complexes
which suffer poor operating results can have a greater negative effect on Boston
Capital's operations as a whole.
BOSTON ASSOCIATES MAY NOT BE ABLE TO BUY CERTIFICATES TO FUND START UP COSTS OF
BOSTON CAPITAL. Boston Capital can borrow money in order to make investments in
apartment complexes before all of the money is raised from the offering. Any
such loan is to be repaid from the money that is raised from the offering. If
insufficient money is raised in the offering to repay such loans, Boston
Associates has agreed to buy enough certificates to provide Boston Capital with
money to repay such loan(s). If Boston Associates does buy certificates, they
will be purchased on the same terms as any other investor, except Boston
Associates will not pay commissions and fees that otherwise would go to it or
its affiliates. There is a possibility that Boston Associates will not have
enough money to meet these obligations.
INVESTORS MAY NOT RECEIVE CASH IF APARTMENT COMPLEXES ARE SOLD. There is no
assurance that investors will receive any cash distributions from the sale or
refinancing of an apartment complex. The price at which an apartment complex is
sold may not be large enough to pay the mortgage and other expenses which must
be paid at such time. If that happens, investors will not get all of their
investment back, and the only benefit from an investment in Boston Capital will
be the tax credits received.
A DECREASE IN AN INDIVIDUAL INVESTOR'S TAXABLE LIABILITY MAY LIMIT HIS BENEFIT
RECEIVED FROM TAX CREDITS. A change in an individual investor's personal tax
situation which reduces his taxable income will substantially reduce, defer or
eliminate the benefits to him of the tax credits. If an investor's adjusted
gross income increases to more than $200,000 in a particular year, any allocated
historic tax credits also will be substantially reduced, deferred or eliminated.
In addition, if an investor becomes subject to the alternative minimum tax, the
tax credits cannot be used to offset this tax.
INVESTORS MAY NOT BE ABLE TO LIQUIDATE THEIR INVESTMENT PROMPTLY AT A REASONABLE
PRICE. Although it is possible that the certificates in all series may be listed
on a national securities exchange, there is no guarantee that such a listing can
or will be accomplished or that a public trading market will develop. Currently,
no certificates have been listed on a national securities exchange. The transfer
of certificates will be limited in some cases, including in the event more than
50% of the certificates are
37
<Page>
transferred during any twelve-month period. Investors should consider their
investment in Boston Capital to be a long-term investment.
Boston Associates can impose restrictions on the transfers of certificates in
order to prevent a termination of Boston Capital for tax purposes or prevent a
classification of Boston Capital as something other than a partnership for
federal income tax purposes. In addition, Boston Associates will not allow sales
of certificates to an investor who does not meet the then-applicable suitability
standards.
INVESTORS ARE LIABLE FOR UP TO THREE YEARS FOR THE AMOUNT OF THEIR RETURNED
CONTRIBUTIONS TO ANY BOSTON CAPITAL CREDITORS. In general, limited partners are
not liable for partnership obligations unless they take an active part in the
day-to-day management or control of the partnership's business. The Delaware
Revised Uniform Limited Partnership Act presently allows the investors to
exercise all of their rights in the Fund Agreement without jeopardizing their
limited liability. All rights given limited partners under the laws of the State
of Delaware extend to investors under the terms of the Fund Agreement. Unless an
investor is deemed to be taking part in the control of Boston Capital's
business, his liability is limited to the amount invested in Boston Capital.
Under Delaware law, if an investor has received the return of any part of his
investment without violation of Delaware law or the Fund Agreement, the investor
is liable for a period of one year for the amount of his returned contribution
which would be necessary to pay Boston Capital's creditors for liabilities
incurred during the period the contribution was held by Boston Capital. However,
if any of the money returned to an investor was returned in violation of
applicable Delaware law or the Fund Agreement, then the investor is liable for a
period of three years for the amount of the contribution wrongfully returned.
INVESTORS MAY HAVE LIMITED RIGHTS OF ACTION AGAINST BOSTON ASSOCIATES. Under
Delaware law, Boston Associates is required to exercise good faith and integrity
in handling the affairs of Boston Capital. The Fund Agreement provides that
Boston Associates will not be liable to investors for its actions or omissions
made in good faith and in a manner it reasonably believes was allowed under the
Fund Agreement and in the best interest of Boston Capital. However, if Boston
Associates' conduct constitutes fraud, bad faith, negligence or misconduct, it
would be liable to investors. Therefore, investors may have more limited rights
of action against Boston Associates than would otherwise be available, absent
these provisions in the Fund Agreement.
A SERIES MAY BE LIABLE FOR THE LIABILITIES OF OTHER SERIES. Certificates are
issued in series, and the Fund Agreement provides that each series will
38
<Page>
be treated for economic purposes as a separate partnership, sharing in a
separate and distinct pool of apartment complexes. The rights of investors in
all series will be identical in all other respects, except with respect to
voting rights and accounting matters applicable only to a particular series.
It is possible, however, that each series may not stand on its own with respect
to outside creditors. In such an event, such creditors would be able to reach
all of the assets of Boston Capital, despite the fact that the matter affecting
the creditor related only to a particular series. Therefore, in the event that a
creditor makes a claim against the assets of Boston Capital and it can be
determined that such claim relates to one series only, Boston Associates will
assume liability for any such claim to the extent that the series does not have
sufficient funds to satisfy the claim. In the event there is a proper claim
against more than one series, if the proportional liability of a particular
series can be determined, such series will be liable only for such proportional
amount of the claim. Boston Capital intends to require that the various series
reimburse each other to the extent that expenses relating to a particular series
are borne by another series, but a series may be financially unable to do so.
There is a risk, therefore, that investors in a particular series will be
affected by the performance of another series. This could result in lower
returns on their investments than would otherwise be the case. No claims have
ever been alleged against one series by creditors of another series.
AN INDEPENDENT UNDERWRITER WILL NOT MAKE AN INDEPENDENT INVESTIGATION OF BOSTON
CAPITAL. The Dealer-Manager will receive commissions and other compensation as
an agent of Boston Capital. The Dealer-Manager has not retained counsel separate
from Boston Capital's counsel, but has conducted such due diligence
investigation as it deems necessary under the circumstances. However, because
the Dealer-Manager is an affiliate of Boston Associates, investors will not have
the benefit of an independent investigation of Boston Capital as is customarily
made by independent underwriters.
THE PRICE OF THE CERTIFICATES WAS ARBITRARILY ESTABLISHED AT $10 PER
CERTIFICATE. The $10 certificate price does not necessarily reflect the value of
operating partnership interests to be invested in by Boston Capital. The
determination of the offering price was based primarily on the perceived market
value of the anticipated stream of tax credits expected per certificate. There
is no assurance that when the apartment complexes are sold, there will be enough
money to return any part of the original investment.
THE PROHIBITION ON MERGERS IN THE FUND AGREEMENT MAY LIMIT THE OPERATIONAL
FLEXIBILITY OF BOSTON CAPITAL. Although at this time, Boston Associates has no
intent to effect a merger of Boston Capital with any other entity, the presence
of this prohibition in the Fund Agreement may make it more difficult to effect
any sort of change in control that would involve a merger in the future.
39
<Page>
THIRD PARTY LENDERS MAY BE ABLE TO FORECLOSE ON AN OPERATING PARTNERSHIP
INTEREST PRIOR TO THE SALE OF ALL OF THE CERTIFICATES. To encourage the purchase
of operating partnership interests, Boston Capital intends to make initial
investments in operating partnerships or enter into commitments to make
investments in operating partnerships at any time, including without limitation,
any time prior to the commencement or completion of the sale of the Certificates
for a particular series. Such investments or commitments to make investments
would be made in anticipation of receiving offering proceeds. It is possible
that Boston Capital will not receive sufficient offering proceeds to meet the
obligations with respect to such investments or commitments. If Boston Capital
fails to satisfy its obligations with respect to investments or commitments, an
operating general partner could sue to require performance of such obligations.
As described in "Investment Objectives and Acquisition Policies--Third Party
Loans," Boston Capital has obtained a non-recourse line of credit of up to $40
million from a national bank, Fleet Bank, as agent, to acquire operating
partnership interests prior to receipt of sufficient offering proceeds to
purchase such operating partnership interest. Boston Capital has secured its
obligations under this line of credit by giving a security interest to the
national bank in the operating partnership interest acquired using the line of
credit. If Boston Capital does not receive sufficient proceeds to pay off any
outstanding debt under the revolving line of credit or otherwise defaults under
the revolving line of credit, Boston Capital could lose all or a significant
portion of the operating partnership interest(s) which are securing the
revolving line of credit. The line of credit is available to other series of
Boston Capital.
The revolving line of credit imposes certain restrictions on Boston Capital
which may limit the flexibility of Boston Capital. For example, Boston Capital
may not acquire operating partnership interests in a particular series without
providing the lender the opportunity to approve that transaction if the lender
has lent money to the series. The best interest of the lender as a creditor may
not always be in complete agreement with the best interest of investors and the
acquisition disapproval power granted to the lender could restrict Boston
Capital from making investments which Boston Capital believes is in the best
interest of the investors.
THERE IS NO ASSURANCE THAT LEGAL REMEDIES FOR BREACH OF FIDUCIARY DUTIES WILL BE
AVAILABLE TO INVESTORS. There is no specific Delaware judicial or statutory
authority governing the question of whether an assignee of a limited partner has
the right to bring a derivative action where a specific provision exists in the
Fund Agreement granting such rights. Furthermore, there is no express statutory
authority for a limited partner's class action in Delaware, and whether a class
action may be
40
<Page>
brought by investors to recover damages for breach of the general partner's
fiduciary duties in Delaware state courts is unclear. Accordingly, there is no
assurance that legal remedies will be available or affordable if fiduciary
duties are breached, although it is anticipated that the ability of the
investors to enforce their rights against Boston Associates will be
substantially the same as the rights of the limited partners.
THE INTERESTS OF INVESTORS MAY CONFLICT WITH THE INTERESTS OF BOSTON ASSOCIATES.
Boston Associates' affiliates are committed to the management of many other
limited partnerships that have investments similar to those made by Boston
Capital. Boston Associates and its affiliates, including the Dealer-Manager,
will receive substantial fees, commissions, compensation and other income from
transactions with and by Boston Capital regardless of the success of your
investment. Also, Boston Capital's interests in the operating partnerships may
be inconsistent in some respects with the interests of the applicable operating
general partners. These inconsistent interests arise due to: (1) Boston
Associates' interest in Boston Capital, (2) Boston Associates' receipt of fees
from Boston Capital, and in some cases, from one or more operating partnerships,
and (3) Boston Associates' ongoing business relationships with some of the
operating general partners.
REAL ESTATE RISKS
OCCUPANCY RATES IN APARTMENT COMPLEXES ARE AFFECTED BY ADVERSE CHANGES IN THE
GENERAL OR LOCAL ECONOMIC CONDITIONS. Factors such as excessive building,
changes in neighborhood values, high unemployment, and unanticipated increases
in utility costs may affect the ability of the apartment complex to maintain
high levels of occupancy.
IF THE EXPENSES OF APARTMENT COMPLEXES ARE GREATER THAN THEIR INCOME, BOSTON
CAPITAL MAY HAVE TO PAY ANY OPERATING SHORTFALLS. If the expenses of an
apartment complex are greater than its income, Boston Capital may have to
provide money to pay the shortfall. Otherwise, the apartment complex may need to
be sold on disadvantageous terms in order to raise money. Also, if the apartment
complex does not generate enough income to pay its mortgage payments and
property taxes, the lender could foreclose and Boston Capital could lose its
investment, including a partial recapture of tax credits.
LEVERAGED INVESTMENTS MAY INCREASE THE RISK OF LOSS BECAUSE OF THE DEBT
PAYMENTS. Each of the apartment complexes will have mortgage debt, in an amount
projected to be supported by the rental income of the apartment complex and
approved by Boston Associates, which leverages Boston Capital's investment in
the apartment complex. Leveraging allows Boston Capital to increase the amount
of property that can be invested in with the amount of money raised from the
offering, and thus increase the amount of tax credits available to Boston
Capital. However, leveraging
41
<Page>
also can increase the risk of loss. If there is a foreclosure of a mortgage loan
on an apartment complex, there can be a tax liability to investors including a
partial recapture of tax credits previously taken.
OPERATING GENERAL PARTNERS HAVE LIMITED FINANCIAL RESOURCES AND IF THEY FAIL TO
MEET THEIR OBLIGATIONS, BOSTON CAPITAL MAY HAVE LIMITED REMEDIES AGAINST THEM.
The operating general partner is responsible for completing the construction or
renovation and then renting and operating the apartment complex. If there are
cost overruns in the construction or renovation, or if rental income is not
enough to pay operating expenses, the operating general partner usually is
required to pay such shortfalls with its own money. In addition, the operating
general partners generally will be required to pay Boston Capital some amounts
if the amount of tax credits generated by the apartment complex falls below an
agreed upon level. There is no guarantee that such operating general partners
will have enough money to meet their obligations. If any of the operating
general partners fail to meet their obligations to make these payments, the
remedies of Boston Capital may be limited to removing the operating general
partner as general partner of the operating partnership.
GOVERNMENT REGULATIONS REGARDING APARTMENT COMPLEXES RECEIVING GOVERNMENT
ASSISTANCE MAY LIMIT THE FLEXIBILITY OF THOSE COMPLEXES TO RENT TO TENANTS OR
INCREASE RENTS, THEREBY RESTRICTING THE ECONOMIC BENEFIT TO BOSTON CAPITAL. Some
of the apartment complexes may receive government assistance like governmental
rental subsidies and low interest mortgage loans. Generally, rents in an
apartment complex receiving government assistance cannot be increased without
the prior approval of the applicable government agencies. If needed rent
increases are not approved in a timely manner, an apartment complex may have
operating deficits.
In return for the government assistance, some government regulations may
restrict the type of tenants that can rent apartments in the apartment complex.
This would reduce the pool of potential renters available to rent apartments in
the apartment complex. In addition, government assistance programs providing
rent supplement payments to tenants are fixed in amount, unless Congress and/or
the appropriate agency has approved funding for an increase in the payments. If
there are no increases in rent supplement payments, the operating expenses of an
apartment complex could increase without a corresponding increase in rental
income, ultimately leading to a foreclosure on the apartment complex and the
loss or recapture of tax credits.
Apartment complexes that receive government assistance generally are subject to
restrictions on when and how they can be sold or refinanced. These restrictions
include prohibiting the sale of the apartment complex during the term of the
government assistance or limiting the amount of
42
<Page>
profit the operating partnership can distribute. Due to these restrictions, it
may not be possible to sell or refinance an apartment complex when it is in the
economic interest of Boston Capital or investors to do so.
FIDUCIARY RESPONSIBILITY OF
BOSTON ASSOCIATES
Boston Associates, as general partner, is accountable to the limited partnership
as a fiduciary and consequently must exercise good faith and integrity in
handling Boston Capital's affairs. A court in which any legal action against
Boston Associates is instituted will interpret what constitutes good faith and
integrity.
Where the question has arisen, courts have held that a limited partner may
institute legal action on behalf of himself and all other similarly situated
limited partners--a class action--to recover damages for a breach by a general
partner of its fiduciary duty, or on behalf of the partnership--a partnership
derivative action--to recover damages from third parties.
The Fund Agreement provides that an investor may bring a derivative action on
behalf of a series to recover a judgment to the same extent as a limited partner
has such rights under the Delaware Revised Uniform Limited Partnership Act (the
"Act"). The Act provides for such rights although it requires that the person
bringing a derivative action be a limited partner of the partnership.
There is no specific Delaware judicial or statutory authority governing the
question of whether an assignee of a limited partner has the right to bring a
derivative action where a specific provision exists in the Fund Agreement
granting such rights. Furthermore, there is no express statutory authority for a
limited partner's class action in Delaware, and whether a class action may be
brought by investors to recover damages for breach of the general partner's
fiduciary duties in Delaware state courts is unclear. Accordingly, there is no
assurance that legal remedies will be available or affordable if fiduciary
duties are breached, although it is anticipated that the ability of the
investors to enforce their rights against Boston Associates will be
substantially the same as the rights of the limited partners.
Under applicable Delaware law, Boston Associates, as general partner, is
accountable to investors as a fiduciary and, consequently, is required to
exercise good faith and integrity in handling the affairs of the series.
However, the Fund Agreement provides that Boston Associates and its affiliates
shall not be liable, responsible, or accountable in damages or otherwise to
Boston Capital or to any of the investors for any act or omission performed or
omitted by Boston Associates or its affiliates in good faith and in the best
interest of Boston Capital, except for conduct constituting fraud, bad faith,
negligence, misconduct or breach of fiduciary duty. Boston Capital also
indemnifies Boston Associates and its affiliates against
43
<Page>
and for loss, liability or damages--including all judgments, costs and
attorneys' fees and amounts expended in the settlement of any claims of
liability or damages--incurred by them in good faith and in a manner reasonably
believed by them to be in Boston Capital's best interests, in connection with
any act or omission in connection with the business of Boston Capital, provided
that the course of conduct which caused the loss or liability is not
attributable to fraud, bad faith, negligence, misconduct or breach of fiduciary
duty with respect to any such act or omission. Such indemnification is
recoverable only out of the assets of Boston Capital and not from investors.
Under the provisions of the Fund Agreement, investors may have a more restricted
right of action against Boston Associates and some of its affiliates than would
be the case absent these provisions.
The Fund Agreement provides that neither Boston Associates, nor its affiliates,
the Dealer-Manager nor Boston Capital shall be indemnified against such
liabilities arising under federal or state securities laws, rules or
regulations, unless: (1) Boston Associates, or its affiliates, the
Dealer-Manager or Boston Capital are successful in defending such action, such
claim is dismissed or a court of competent jurisdiction approves a settlement of
such claim and (2) such indemnification is specifically approved by a court of
law which shall have been advised as to the current position of the Securities
and Exchange Commission and the securities department of Massachusetts and other
applicable state securities laws administrators regarding indemnification for
violations of securities law. Notwithstanding the foregoing, the Assignor
Limited Partner shall be indemnified only as long as it is an affiliate of
Boston Associates.
TO THE EXTENT THAT THE PROVISIONS OF THE FUND AGREEMENT INCLUDE INDEMNIFICATION
FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, SUCH INDEMNIFICATION
IS, IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION AND CERTAIN STATE
SECURITIES DIVISIONS, CONTRARY TO PUBLIC POLICY AND THEREFORE UNENFORCEABLE. IN
ANY CLAIM FOR INDEMNIFICATION FOR FEDERAL OR STATE SECURITIES LAW VIOLATIONS,
THE PARTY SEEKING INDEMNIFICATION WILL PLACE BEFORE THE COURT THE POSITION OF
THE SECURITIES AND EXCHANGE COMMISSION AND CERTAIN STATE SECURITIES DIVISIONS
WITH RESPECT TO THE ISSUE OF INDEMNIFICATION FOR SECURITIES LAW VIOLATIONS.
Investors should also be aware that Boston Associates could have various
defenses available to it if the investors were to bring an action for breach of
its fiduciary duty. Such defenses could include technical defenses such as those
based on statutes of limitations. Also, Boston Associates could attempt to
establish that even though it made an error in judgment, it had, in good faith,
attempted to act in the best interest of Boston Capital. In other words, a mere
mistake in judgment may not constitute a breach of fiduciary duty.
44
<Page>
The matter of the fiduciary responsibility of general partners is an evolving
area of the law and investors who have questions concerning the duties of Boston
Associates should consult with their legal counsel. Boston Capital will not
incur the cost of that portion of any insurance, other than public liability
insurance, which insures any party against any liability, the indemnification
for which is prohibited within this Prospectus.
CONFLICTS OF INTEREST
Boston Associates and the Dealer-Manager are affiliates. John P. Manning and
Richard J. DeAgazio equally own all the stock of BCS Group, Inc., the parent
company of the Dealer-Manager. Any transactions between Boston Capital and
Boston Associates and its affiliates will be entered into without the benefit of
arm's-length bargaining and will involve conflicts of interest.
Management and operation of Boston Capital will subject Boston Associates to
certain conflicts of interest. Some agreements and arrangements among Boston
Capital and Boston Associates and its affiliates have been established by Boston
Associates and are not the result of arm's-length negotiations. Although some
provisions of the Fund Agreement are designed to mitigate such conflicts of
interest by limiting the authority of Boston Associates and its ability to enter
into transactions with Boston Capital, such conflicts cannot be completely
eliminated. See "Fiduciary Responsibility of Boston Associates" for a discussion
of Boston Associates' fiduciary duties to the investors, which, in general,
require Boston Associates to consider the best interests of investors in
managing Boston Capital.
In considering the risks and merits of an investment in Boston Capital,
prospective investors should carefully consider the following potential
conflicts of interest:
INCONSISTENT INTERESTS
Your interests may be inconsistent in some respects with Boston Associates'
interests. Also, Boston Capital's interests in the operating partnerships may be
inconsistent in some respects with the interests of the applicable operating
general partners.
These inconsistent interests arise due to: (1) Boston Associates' interest in
Boston Capital, (2) Boston Associates' receipt of fees from Boston Capital, and
in some cases, from one or more operating partnerships and (3) Boston
Associates' ongoing business relationships with some of the operating general
partners.
Conflicts of interest between Boston Associates and its affiliates also arise in
connection with their performance of activities, such as the decisions they can
make in the following circumstances without your prior consent:
- - withholding payments of capital contributions to the operating partnerships;
45
<Page>
- - removing any of the operating general partners;
- - exercising the repurchase obligation of the operating general partners upon
the occurrence of a repurchase event.
Other transactions, such as terminating Boston Capital's business, selling
operating partnership interests, selling or refinancing an apartment complex, or
liquidating an operating partnership, may produce profits for Boston Associates
and/or its affiliates and/or the operating general partner(s) at a time when it
produces adverse tax or other consequences for you. Conversely, Boston Capital's
or an operating partnership's decision to continue business may be advantageous
to them at a time when termination may be advantageous to you.
Each Operating Partnership Agreement will restrict the right of the applicable
operating general partner(s) to sell or otherwise dispose of an apartment
complex and to refinance the permanent mortgage loan as to an apartment complex
without the approval of Boston Associates. In general, Boston Associates will
consent to the sale or disposition of an apartment complex where such sale or
disposition is consistent with Boston Capital's investment policies. See
"Investment Objectives and Acquisition Policies--Acquisition Policies."
The operating general partners of some or all of the operating partnerships may
receive a Sales Preparation Fee upon the sale of the applicable apartment
complex for their services in preparing that apartment complex for sale. The
amount of the Sales Preparation Fee is expected to be 3% of the gross sale price
of the applicable apartment complex. It is not expected that any comparable fee
will be payable for any refinancing of the permanent mortgage loan for an
apartment complex. Therefore, the interest of the operating general partners to
arrange for the sale of an apartment complex--and thereby receive a Sales
Preparation Fee--may be in conflict with the interest of Boston Capital, and
therefore the investors, to receive benefits from a refinancing of the permanent
mortgage loan.
The inherent conflict caused by the affiliation of a builder of an apartment
complex and an operating general partner causes certain government agencies to
require that an independent architect review the work of each builder so
affiliated. Because many of the management agents are expected to be affiliated
with the operating general partners, a continuing conflict of interest will
exist because there may not be any independent review of their performance on
behalf of the operating partnership.
Each Operating Partnership Agreement should provide that if an apartment complex
is subject to substantial building code violations which are not cured within
six months after notice from the applicable governmental agency or department,
or if certain operational performance standards are not met, then, at Boston
Associates' request and subject to the applicable agency's approval, the
operating general partners must terminate
46
<Page>
the Management Agreement and appoint a new management agent, which shall not be
an affiliate of the operating general partners.
Under the Fund Agreement and the Operating Partnership Agreements, Boston
Associates or the operating general partner(s), as applicable, are or will be
authorized to employ their respective affiliates to perform services for, or to
sell goods to, Boston Capital or the operating partnership, as applicable, thus,
potentially causing additional conflicts of interest.
The Fund Agreement, however, sets forth significant restrictions on the terms of
agreements for the provision of any goods and services to Boston Capital by
Boston Associates and its affiliates. Such restrictions generally require the
terms of transactions with affiliates to be no less favorable to Boston Capital
than the terms obtainable from nonaffiliated entities rendering similar services
as an ongoing activity in the same geographical location. As general partner of
Boston Capital, Boston Associates must fulfill its fiduciary duty to exercise
good faith and integrity in handling all of Boston Capital's affairs.
COMMON MANAGEMENT; SELECTION OF
OPERATING PARTNERSHIP INTERESTS
Boston Associates and its affiliates are committed to the continuing management
of numerous public and private limited partnerships which have invested or will
invest in limited partnerships that own apartment complexes similar to the
operating partnerships in which Boston Capital will invest. The operating
general partners also are committed to the continuing management of other
limited partnerships which are similar to the operating partnerships. Moreover,
operating general partners may be general partners of other partnerships that
may own apartment complexes located proximate to or in the same market area, and
compete with Boston Capital's apartment complexes.
PUBLIC LIMITED PARTNERSHIPS
If Boston Associates or any of its affiliates offer interests in public limited
partnerships with similar investment objectives as Boston Capital and which will
acquire operating partnership interests that would satisfy the same criteria and
standards of operating partnership interests to be acquired by Boston Capital,
Boston Associates and its affiliates will review the investment portfolio of
each partnership, including any series being offered by each such entity. To the
extent that they have selected and/or evaluated operating partnership interests,
they will in their sole determination decide which entity will acquire the
investment on the basis of various factors.
These factors include: (1) the amount of funds available and the length of time
the funds have been available for investment, (2) the cash requirements of each
entity and (3) the effect of the acquisition on each entity's portfolio.
47
<Page>
If funds should be available to two or more public limited partnerships to
acquire a given investment and all factors have been evaluated and deemed
equally applicable to each entity, then Boston Associates and its affiliates
will acquire investments for the entities on a basis of priority determined by
the dates of formation of the entities, including any series being offered by
each partnership.
In the event that two or more of Boston Capital's series have funds available at
the same time for investment, and investment opportunities become available in
operating partnership interests, conflicts may arise as to which of Boston
Capital's series should invest in the investments involved. In that event,
Boston Associates and its affiliates will review the investment portfolio of any
such series in the same manner in which they evaluated the public limited
partnerships in the preceding paragraph. Boston Capital will not invest, with
respect to any series of certificates, in any operating partnership owned or
controlled by any of its affiliates.
Boston Associates and its affiliates, will devote only as much of their time to
Boston Capital's business as in their judgment and experience is reasonably
required. Because Boston Associates' officers and employees are also officers
and/or employees of other affiliates of Boston Associates, they will have
conflicts of interest in allocating management time, services and functions
among Boston Capital and any present and future partnerships or other ventures
which are or may be organized by Boston Associates' affiliates. If necessary,
Boston Capital will hire its own employees to help carry out its business and
operations. Boston Associates and its affiliates will allocate their management
time, services and functions among the various operating partnership interests,
and if additional series of certificates are issued, among the several series of
certificates, as in their discretion best serves the interest of Boston Capital
and investors. For an indication of the number and size of partnerships which
are presently being managed by Boston Associates' affiliates, see "Prior
Performance of Boston Associates and Its Affiliates."
OTHER TRANSACTIONS WITH BOSTON ASSOCIATES
OR ITS AFFILIATES
Boston Associates and its affiliate(s) should provide services to Boston Capital
in connection with finding, analyzing, structuring and acquiring operating
partnership interests. Boston Associates and its affiliates, including the
Dealer-Manager, will receive substantial fees, commissions, compensation and
other income from transactions with Boston Capital as described in this
Prospectus and the Fund Agreement. See "Compensation and Fees."
EXPENSES
All of Boston Capital's expenses must be billed directly to and paid by the
respective series. Boston Associates and its affiliates may be reimbursed
48
<Page>
for the actual costs of goods and materials used for or by Boston Capital;
provided, however, that unless Boston Associates or its affiliates purchase the
goods or materials on behalf of Boston Capital from an independent third party,
the reimbursement to Boston Associates or its affiliates therefor shall not
exceed the lesser of the cost of such goods and materials or 90% of the
competitive price which would be charged by non-affiliated persons. If Boston
Associates or its affiliates purchase goods or materials from an independent
third party which are used by Boston Capital, Boston Associates may be
reimbursed at its cost as set forth in Section 5.01(e) of the Fund Agreement.
No reimbursement shall be permitted for services for which Boston Associates or
its affiliates are entitled to compensation by way of a separate fee. Also
excluded from the allowable reimbursement, except as permitted under Section
5.01(e) of the Fund Agreement, shall be general overhead expenses in connection
with the ongoing administration of Boston Capital during its operational phase,
such as rent or depreciation, utilities, capital equipment, other administrative
expenses or salaries or fringe benefits incurred by or allocated to any of their
controlling persons, as defined in Section V.E.1. of the NASAA Guidelines, which
includes any of their officers, directors, senior management personnel or
persons owning 5% or more of the equity of Boston Associates or any affiliate
thereof, or persons having the power to cause the direction of the Boston
Associates or any of its affiliates.
ANNUAL REPORT
Boston Capital's annual report must contain a breakdown of any costs reimbursed
to Boston Associates and its affiliates. Boston Associates and its affiliates
shall cause its accountants to verify the allocation of such costs to Boston
Capital. The method of verification shall, at minimum, provide: (1) a review of
the time records of individual employees, the cost of whose services were
reimbursed and (2) a review of the specific nature of the work performed by each
of those employees. Accountants will itemize the additional costs of the
verification on a program-by-program basis. Boston Capital may reimburse Boston
Associates for these costs in accordance with this provision only to the extent
that such reimbursement, when added to the cost for administrative services
rendered, does not exceed the competitive rate for such services as determined
above.
SERVICES
Any services beyond those described under "Compensation and Fees" and in the
Fund Agreement that Boston Associates or its affiliates perform for Boston
Capital may be provided only under extraordinary circumstances and must meet the
following criteria:
- - the compensation, price or fee must be comparable and competitive with the
compensation, price or fee of any other person who is render-
49
<Page>
ing comparable services or selling or leasing comparable goods which could
reasonably be made available to Boston Capital and shall be on competitive
terms; provided, however, that the services will be provided at a price which
does not exceed the lesser of the cost of such services to Boston Associates
or its affiliates or 90% of the competitive price which would be charged by
non-affiliated persons rendering similar services in the same or comparable
geographic location;
- - the fees and other terms of the contract for services shall be disclosed in a
supplement to this Prospectus if the services are rendered during the
offering period or in the annual reports to be provided to investors pursuant
to Article IX of the Fund Agreement;
- - Boston Associates or its affiliates must be previously engaged in the
business of rendering such services or selling or leasing such goods,
independently of Boston Capital and as an ordinary and ongoing business;
- - all services or goods for which Boston Associates or its affiliates are to
receive compensation shall be embodied in a written contract which precisely
describes the services to be rendered and all compensation to be paid. Each
contract must contain a clause allowing termination without penalty on sixty
days' notice. In addition, all such services must be necessary to the prudent
operation of Boston Capital.
JOINT VENTURE
Operating partnership interests may be invested in jointly by series of
certificates, or may be invested in jointly by a series of certificates with
another similar public offering, provided that (1) the two programs have similar
investment objectives, (2) there are no duplicate property management or other
fees, (3) the compensation to the sponsors of each program is substantially
similar, (4) each program will have a right of first refusal if the other
program wishes to sell its operating partnership interest and (5) the investment
of each program is on substantially the same terms and conditions.
There is a potential risk that investors in a series of certificates may not
acquire a controlling interest in a joint investment or, that if an equal
interest is acquired by each program, there may be a potential risk of impasse
on decisions.
MISCELLANEOUS
No rebates or give-ups may be received by Boston Associates or its affiliates,
nor may Boston Associates or its affiliates participate in any reciprocal
business arrangements that would circumvent the Fund Agreement. Furthermore,
reciprocal business arrangements that would circumvent the restrictions of the
Fund Agreement against dealing with affiliates are prohibited.
50
<Page>
Boston Capital's monies may not be commingled with the funds of any other
person. Nothing contained in this provision, however, shall prohibit Boston
Associates from establishing a master fiduciary account pursuant to which
separate subtrust accounts are established for the benefit of affiliated
entities.
Boston Capital may obtain loans from Boston Associates or any affiliate of
Boston Associates, subject to the limitations as to interest rates set forth
under "Compensation and Fees," and as to borrowing policies under "Investment
Objectives and Acquisition Policies--Borrowing Policies." However, Boston
Associates may not borrow money from Boston Capital.
EMPLOYMENT OF PROFESSIONALS
Nixon Peabody LLP in Washington, D.C., is Counsel to Boston Capital, Boston
Associates and affiliates of the Boston Associates, the Assignor Limited
Partner, the Dealer-Manager and to other entities in which affiliates of Boston
Associates are general partners.
If any dispute should arise between Boston Capital and Boston Associates or any
affiliate of Boston Associates, depending on the nature of the dispute, Boston
Associates may cause Boston Capital to retain separate counsel for such matters
as and when appropriate.
Reznick Fedder & Silverman, of Bethesda, Maryland, are accountants and auditors
for Boston Capital, Boston Associates, the Assignor Limited Partner and for
other entities in which Boston Associates and/or its affiliates are general
partners.
COMPENSATION AND FEES
The amounts and kinds of all of the compensation and fees to be paid to Boston
Associates and its affiliates, during the various phases of the organization,
operation and termination of Boston Capital are summarized below. None of the
fees to be paid to Boston Associates and its affiliates has been or will be
negotiated at arm's-length. No compensation that duplicates the fees to be paid
to Boston Associates and its affiliates will be paid to the operating general
partners or their affiliates in connection with organization and operation of
the operating partnerships. Compensation and/or fees in one category in excess
of the maximum amounts disclosed below may not be recovered by reclassifying
them under a different category. Boston Capital shall not pay, directly or
indirectly, a commission or fee to Boston Associates or its affiliates in
connection with the reinvestment or distribution of sale or refinancing proceeds
of the apartment complexes.
51
<Page>
<Table>
<Caption>
COMPENSATION WHO RECEIVES THE WHAT THE COMPENSATION
CATEGORY COMPENSATION EQUALS
------------ ---------------- ---------------------
Reimbursement for Organization & Boston Associates - equal to all costs and expenses paid
Offering Expenses in connection with the organization
of Boston Capital and offering of
certificates, including but not
limited to legal, accounting and
investor communications and computer
services, printing, travel,
distribution and filing.
- actual amount depends on the number
of certificates sold, but is not
expected to exceed $1,225,000 if the
maximum of $35,000,000 of
certificates are sold in each series.
- if the Front End Fees, including
Organization and Offering Expenses
and Selling Commissions, exceed the
amount allowed by Section IV.C.2 of
the NASAA Guidelines--up to 30.5% of
the Gross Offering Proceeds-- Boston
Associates will pay the excess.
Selling Commissions Boston Capital Services, Inc. - equal to $0.70 per certificate (7%)
sold.
Dealer-Manager Fee Boston Capital Services, Inc. - equal to $0.20 per certificate (2%)
sold.
Non-Accountable Expense Allowance Boston Associates - equal to accountable and
non-accountable expenses paid to
Boston Associates for due diligence
expenses and administrative costs
related to the offering.
- equal to up to $0.10 per certificate
(1%) sold.
</Table>
52
<Page>
<Table>
<Caption>
COMPENSATION WHO RECEIVES THE WHAT THE COMPENSATION
CATEGORY COMPENSATION EQUALS
------------ ---------------- ---------------------
Asset Acquisition Fee Boston Capital Holdings LP - equal to $0.64 per certificate (6.4%)
sold.*
Reimbursement for Investment Expenses Boston Associates - equal to all costs and expenses paid
in connection with the structuring
and making of Boston Capital's
investments, including the
reimbursement of any interest expense
incurred in obtaining funds with
which to make:
1. loans and/or option and/or deposit
payments to operating partnerships
prior to Boston Capital's
acquisition of an interest.
2. investments in operating
partnerships prior to the sale of
the number of certificates whose
net offering proceeds would enable
Boston Capital to acquire
interests.
- these reimbursements will not exceed
$15 million.
Annual Fund Management and Reporting Boston Capital Asset Management Limited - annually equal to 0.5% of the
Fees Partnership aggregate cost of the apartment
complexes, which is the sum of equity
invested by Boston Capital in the
apartment complex plus the amount of
mortgage debt on the apartment
complex.
- could be about $383,250 per year if
$35,000,000 of certificates are sold
in each series.
- the annual Fund Management Fee will
be reduced by the amount of any
Reporting Fees paid to affiliates of
Boston Associates to the extent the
combined amounts of the Fund
Management Fee and the Reporting Fees
exceed 0.5% of the aggregate cost of
the applicable apartment complexes on
an annual basis.
</Table>
53
<Page>
<Table>
<Caption>
COMPENSATION WHO RECEIVES THE WHAT THE COMPENSATION
CATEGORY COMPENSATION EQUALS
------------ ---------------- ---------------------
Property Management Fee** Affiliates of Boston Associates - equal to the lesser of:
(1) 5% of the gross receipts of any
apartment complex with respect to which
property management services are
provided by an affiliate of Boston
Associates;
(2) the competitive fees for those
services in the area.
Loan Interest from Boston Associates or Boston Capital or Operating Partnership - not to exceed the interest or similar
Affiliates charges or fees of unrelated lending
institutions for similar loans.
Share of Profits, Losses and Credits and Boston Associates - 0.25% of tax credits and losses;
of Net Cash Flow Distribution - 0.25% of any net cash flow
distributions (subordinated to the
achievement of priority return);
- 5% of net proceeds of the sale of the
apartment complexes.
</Table>
- ----------
* Reduced to the extent that any acquisition fees, development fees or
consulting fees are paid to the Boston Affiliates or its affiliates by
operating partnerships or operating general partners.
** Affiliates of Boston Associates will not manage any of the apartment
complexes, and therefore not receive the Property Management Fee, unless
the property manager is removed for cause and an affiliate of Boston
Associates becomes the replacement property manager.
54
<Page>
INVESTMENT OBJECTIVES AND ACQUISITION POLICIES
INVESTMENT OBJECTIVES
Each Series' principal business is to invest, as a limited partner, in other
limited partnerships (the "operating partnerships"), each of which will develop,
own and operate an apartment complex that is expected to qualify for federal
housing tax credits and/or (in less than 10% of the apartment complexes)
historic tax credits. These apartment complexes may be newly constructed or
substantially renovated. In addition, most of such apartment complexes are
expected to be the recipients of further government assistance through
government direct grant or loan, loan guarantee, mortgage insurance and/or
subsidy programs.
Some of the operating partnerships in which Boston Capital intends to invest
have been identified and are described in the supplement accompanying this
Prospectus. Boston Capital will again supplement this Prospectus if and when
negotiations with respect to acquisition of an operating partnership interest
have progressed to an extent that there is a reasonable probability that Boston
Capital will acquire that particular operating partnership interest. Boston
Capital will supply these supplement(s) to all investors in the series of
certificates then being offered and to all prospective investors.
Boston Capital has four objectives for its investments in operating
partnerships, in order of importance:
(1) GENERATE TAX CREDITS DURING THE FIRST TEN TO TWELVE YEARS OF AN INVESTMENT
IN EACH OPERATING PARTNERSHIP WHICH INVESTORS CAN USE TO OFFSET FEDERAL INCOME
TAXES FROM ALL SOURCES. These tax credits include federal housing tax credits,
and in limited circumstances a small amount of historic tax credits. Each
apartment complex must meet continuing occupancy requirements for the initial
fifteen-year period beginning once tax credits are first taken. Tax credit rules
can be complicated and the failure of apartment complexes to comply with them
can result in the loss and/or recapture of tax credits sometimes years after tax
credits are allocated.
(2) PRESERVE AND PROTECT INVESTOR'S CAPITAL. Boston Capital requires the general
partners of the operating partnerships to:
- - guarantee completion of the apartment complex;
- - fund any construction cost overruns;
- - pay operating shortfalls for a limited period;
- - guarantee a specific minimum amount of tax credits.
While these safeguards provide additional protection, there can be no assurance
that these measures will adequately protect investments in the respective
partnerships.
55
<Page>
(3) PROVIDE TAX BENEFITS IN THE FORM OF PASSIVE LOSSES. Individual investors
generally may deduct any tax losses allocated to them only to the extent of your
income derived from passive activities, namely, income other than wages,
salaries, dividends and interest. See "Risk Factors--Tax Risks Associated with
the Partnership Investments."
(4) DISTRIBUTE NET CASH, IF ANY, FROM THE SALE OR REFINANCING OF APARTMENT
COMPLEXES. Under certain favorable market and regulatory conditions, Boston
Capital will distribute to investors part or all of their original investment
when some or all of the properties are sold or refinanced. You can get money
back from the sale or refinancing of an apartment complex equal to your original
investment only if the net sales price is large enough to pay fees and expenses
paid in this offering, estimated to be 25% of your initial investment, plus all
costs of the sale. Tax credits may be the only material benefit from the
investment because the investors may not get back their capital.
Generally, the sale of Boston Capital's interest in an operating partnership or
the sale by an operating partnership of its apartment complex will be subject to
various restrictions including, but not limited to, the necessity of obtaining
the approval of any governmental agency(ies) providing government assistance to
the apartment complex, obtaining the consent of the operating general partner(s)
and the furnishing of various legal opinions. These restrictions could lead to a
longer holding period for certain apartment complexes or a sale of apartment
complexes or operating partnership interests, as applicable, to purchasers
subject to certain government restrictions and/or conditions.
Boston Capital will undertake to hold operating partnership interests for the
initial fifteen-year federal housing tax credit compliance period. Boston
Capital currently anticipates selling operating partnership interests, or the
underlying apartment complexes, as soon as practicable after that time,
consistent with the terms of the applicable Operating Partnership Agreements,
the Fund Agreement, applicable governmental restrictions and the best interests
of the investors. However, after the expiration of the ten-year period, an
interest in an operating partnership may be sold, or Boston Capital may agree to
the sale of the underlying apartment complex, in the sole discretion of Boston
Associates when it deems such action to be in the best interest of investors.
However, the continuing restrictions and compliance requirements of the federal
housing tax credit program, as well as the uncertainty of a market for buildings
such as the apartment complexes, may make it impossible for Boston Capital to
liquidate some of its investments until well after the fifteenth year, even
though tax credits are available only for a ten-year period as to each apartment
complex.
56
<Page>
The attainment of these investment objectives will depend on many factors,
including the ability of Boston Associates to select suitable investments on a
timely basis, the timely completion and successful management of such
57
<Page>
investments and future economic conditions in the United States. Accordingly,
there can be no assurance that any series will meet its investment objectives.
Boston Capital selected the investment objectives after consulting with the
Dealer-Manager regarding tax-free investments currently available to investors
in other similar tax credit investments. Tax credits will not be available for
an apartment complex until it has been placed in service and, with respect to
tax credits, until its apartment units are occupied by qualified tenants. No tax
credits will be available with respect to an apartment complex after the
ten-year credit period applicable to each apartment complex. See "Tax Credit
Programs--Use of the Tax Credit."
ACQUISITION POLICIES
Boston Capital will make investments in operating partnerships which Boston
Associates believes to be consistent with Boston Capital's investment
objectives. In the event that the applicable provisions of the tax code are not
interpreted in the way Boston Associates has interpreted such provisions, and as
are set forth in this Prospectus, or tax law changes occur which would
materially adversely affect the ability of Boston Capital to attain its
investment objectives by pursuing the acquisition policies described below,
Boston Associates will have the right to modify appropriately such acquisition
policies so as to afford Boston Capital a better opportunity to achieve its
investment objectives subject to the Fund Agreement. If Boston Capital modifies
the acquisition criteria and policies in the Fund Agreement, a material
amendment to the Fund Agreement would require your consent.
Boston Capital competes with other entities making investments in affordable
housing. These competitors may drive up the price Boston Capital must pay for
operating partnership interests or may succeed in acquiring these interests
themselves. If Boston Capital pays higher prices for operating partnership
interests, investors may experience a lower return on your investment. Boston
Capital does not believe that there are any dominant competitors in the area of
public tax credit partnerships.
Each operating partnership must use the straight line method of depreciation
over a recovery period of 27.5 years, or forty years in the event Boston Capital
elects to do so, with respect to the applicable apartment complex; provided,
however, that with respect to any non-profit operating partnership, an amount
equal to the tax-exempt entity's proportionate share of the ownership of the
applicable apartment complex will be depreciated over forty years using the
straight line method, unless certain allocations are made.
Boston Capital and/or its affiliates may arrange for Boston Capital to borrow
funds from lending institutions in order to acquire previously specified
investments in operating partnerships after the minimum offering of 250,000
certificates with respect to a particular series has been sold and before
sufficient additional net offering proceeds have been raised in a particular
series
58
<Page>
to make such an investment. Any such loans shall be repaid, with interest, by
Boston Capital from the net offering proceeds of the applicable series. Any such
reimbursement of interest expense will be made (1) only from net offering
proceeds allocated to the category of acquisition expenses as set forth in
"Estimated Use of Proceeds", and (2) only in accordance with the applicable
limitations on Front End Fees as provided in this Prospectus.
If the minimum offering with respect to the particular series of certificates is
sold and a sufficient number of certificates to provide Boston Capital with
sufficient funds to repay the loan(s) has not been sold prior to the termination
of the offering of the series of certificates, then Boston Associates and/or its
affiliates will purchase a sufficient number of certificates to provide Boston
Capital with funds to repay such loan(s). These certificates will be purchased
on the same terms and conditions as other investors except Boston Associates
will not pay selling commissions, the Dealer-Manager Fee, or other organization
and offering expenses otherwise payable to the Dealer-Manager from Boston
Capital.
In no event will the investment in any operating partnership interest acquired
by Boston Capital exceed 20% of the gross offering proceeds of such series,
based upon the maximum amount of certificates offered with respect to such
series, unless investors are informed of such proposed investment by: (1)
supplement to this Prospectus during the offering of such series, or (2) a
report sent to investors within forty-five days of the close of the quarter in
which the investment is made, if a reasonable probability that such investment
will be made does not occur until after the offering of such series has
concluded. In addition, Boston Capital will not invest in any operating
partnership whose operating general partner is an affiliate of Boston
Associates. The apartment complexes which are owned by the operating
partnerships to be invested in by Boston Capital can be located anywhere in the
United States, its territories or possessions. Boston Associates intends to seek
as much diversity as reasonably possible in terms of the locations and sizes of
the apartment complexes.
Boston Capital uses the following criteria to select particular operating
partnerships for its investment:
- - capability of the development group, including the history and performance of
the sponsor, general contractor, architect, managing agent and others
associated with development and operation of the apartment complex and their
respective relationships with the operating general partner(s);
- - the financial strength of the operating general partner(s);
- - analysis of all data supplied by the operating general partner(s) to the
conventional lenders and/or applicable government agencies to obtain mortgage
loan commitments, with special attention to the cost of construction,
including provisions for assuring completion of construction of
59
<Page>
the apartment complex, geographic distribution, proposed rents, and costs of
property operations;
- - general rental market conditions in the area of the proposed apartment
complex, including vacancy rates;
- - the operating expenses of comparable apartment complexes;
- - in the case of existing apartment complexes, the history and performance of
the apartment complex.
Boston Accociates will obtain an engineering report and/or an appraisal
pursuant to section V.L. of the NASAA Guidelines. Any appraisal obtained is
only an estimate of value and should not be relied on as a measure of
realized value. The appraised value of prospective apartment complexes will
not be provided in supplements to this Prospectus.
Phase I environmental reports are required for all apartment complexes prior to
investing, and Boston Capital will not invest in an apartment complex with
environmental conditions or hazards that are not mitigated.
The size of the tax credit base and the percentage interest to be acquired by
Boston Capital in each operating partnership will be important factors in
determining the acquisition price for each operating partnership interest.
Boston Capital will generally attempt to acquire the following interests in each
operating partnership:
- - a 90%-99.99% interest in the profits, credits and losses;
- - a 10%-99.99% interest in the distributable cash flow of each operating
partnership;
- - the balance remaining with the operating general partner(s).
In addition, Boston Associates anticipates that the interest of a series in
liquidation, sale or refinancing proceeds of each operating partnership will be
between 10% and 99.99%, with the balance remaining with the operating general
partner(s).
In order to preserve and protect each series' interest in the profits, credits
and losses allocated, and the net cash flow distributed by the operating
partnerships, the Operating Partnership Agreement will contain provisions that
are intended to assure compliance with Section 704(b) of the tax code and the
regulations thereunder, and Counsel will advise Boston Associates that it is
more probable than not that, assuming that the capital account balances of the
partners of the operating partnership are not significantly adjusted by reason
of capital contributions other than those provided for in provisions of the
Operating Partnership Agreement corresponding to Article IV of the Fund
Agreement, the distributive share of each partner of the operating
partnership of income, gain, credit, loss or deduction will be determined and
allocated substantially in accordance with the initial intent of the partners
of the operating partnership.
60
<Page>
If construction or renovation of any apartment complex has not been completed as
of the date a series invests in the applicable operating partnership, Boston
Capital will obtain from the operating general partners assurances and financial
guarantees intended to reduce the risks inherent during the construction period.
The Operating Partnership Agreements will provide for construction completion
assurances from the operating general partners or their affiliates, whereby
completion will be substantially in accordance with the approved plans and
specifications, and all requirements necessary to obtain the required
certificates of occupancy for dwelling units will be met within an agreed-upon
period from the date of commencement of construction.
These assurances are expected to be secured by one or more of the following
mechanisms for the benefit of Boston Capital and the construction and/or
permanent mortgage lender, and acceptable to Boston Associates, including but
not limited to:
- - payment and performance bonds;
- - a letter of credit for all or some portion of the guarantee or assurance;
- - the establishment of a reserve of funds held by an independent escrow agent
or other party acceptable to Boston Associates;
- - the right of Boston Capital to withhold funds payable by Boston Capital to
the operating partnership or by the operating partnership to the operating
general partner or its affiliates, and to apply such funds to the completion
of the apartment complex.
The specific types of security backing the construction guarantees will be
negotiated with the operating partnerships prior to the execution of definitive
acquisition agreements and will depend on Boston Associates' determination as to
the relative financial strength of individual operating general partners and the
status of construction at the time of the signing of definitive acquisition
agreements. These security arrangements may not be sufficient to provide
security for one hundred percent of the operating general partner's obligations.
Boston Associates also will attempt to negotiate guarantees from the operating
general partners to cover debt service and operating expenses arising from the
operation of the applicable apartment complex. The amount of these operating
deficit guarantees may be limited to a specified term and/or dollar amount.
Throughout the offering period, this Prospectus will be supplemented to set
forth descriptions of any operating partnerships in which the respective series
has invested or in which Boston Associates reasonably believes such series will
invest. The material terms of any operating deficit guarantee will be disclosed
in that supplement. Each operating partnership will arrange for comprehensive
casualty insurance coverage which is customary for property similar to the
applicable apartment complex.
If a particular series invests in operating partnerships with the same or
affiliated operating general partners representing an excess of 20% of the gross
61
<Page>
offering proceeds of a particular series, financial data for operating general
partners giving construction and/or operating deficit guarantees will be
provided to investors in a supplement to this Prospectus.
REPURCHASE EVENTS
We anticipate that the operating general partner(s) of each operating
partnership will be obligated to repurchase the operating partnership interest
if the operating partnership:
- - fails to qualify for tax credits in the year that the applicable apartment
complex is placed in service;
- - fails to cause the applicable apartment complex to be placed in service or to
achieve certain occupancy levels by a date certain;
- - fails to achieve permanent mortgage loan closing by a date certain;
- - fails to continue to qualify for tax credits during the period when capital
contributions of Boston Capital are due to the operating partnership.
Additionally, we anticipate that if any applicable government agency
disapproves, or fails to give any required approval of, the admission of Boston
Capital within 180 days of the admission of Boston Capital to an operating
partnership, then, unless Boston Associates waives this requirement, the
applicable operating general partner(s) will be obligated to repurchase the
operating partnership interest of Boston Capital and to refund to it the
installments of capital contribution which have been paid.
ADJUSTER PROVISIONS
Each Operating Partnership Agreement is expected to contain adjuster provisions
which will operate to reduce the amount of capital contributions that a series
is obligated to make to an operating partnership in the event that, during the
first several years of a series' investment but generally not less than sixty
months (the "adjustment period"), the actual credit achieved by the operating
partnership is less than 90%-100% of the projected credit with respect to the
operating partnership. Any such reduction in, or return of, capital
contributions to Boston Capital as described above will be available for
reinvestment within the time period(s) allowed for investment described under
"Unused or Returned Funds" below in this section; thereafter, any such funds
will be returned to investors on a pro rata basis as a return of money
originally invested.
We anticipate that the Operating Partnership Agreements will provide that, in
the event that any such shortfall in the projected credit occurs after the
adjustment period, Boston Capital will be treated as having made a constructive
advance to the operating partnership with respect to that year (a "credit
recovery loan") as to a certain percentage of the shortfall, plus the amount of
any recapture, interest or penalty payable as a result of the
62
<Page>
shortfall for that year which will be repaid from liquidation, sale or
refinancing proceeds with respect to that operating partnership. The credit
recovery loan will bear interest at a rate to be negotiated.
It is anticipated that the above-described repurchase provisions, which are
anticipated to apply with respect to tax credits expected to be generated by
each operating partnership, will not be applicable, or will be limited, with
respect to historic tax credits expected to be generated by an operating
partnership, if applicable. See "Federal Income Tax Matters--Historic Tax
Credit."
INTERIM THIRD PARTY LOANS
Boston Capital and a national bank have entered into an agreement to give Boston
Capital a revolving line of credit which it can use to purchase operating
partnership interests before a series has received sufficient capital
contributions to purchase the operating partnership interest(s). Boston Capital
has agreed that: (i) it will not use the line of credit to purchase any
operating partnership interest without the national bank's prior approval; and
(ii) it will place the capital contributions received from the Investors in a
separate interest bearing account of Boston Capital pending the use of such
funds in Boston Capital's business. Boston Capital has secured its obligations
under this revolving line of credit by giving the national bank a security
interest in the following assets of the series which is acquiring the operating
partnership interest(s): (i) the operating partnership interests which were
acquired utilizing the line of credit; (ii) the capital contributions of the
investors for the series; and (iii) the reserves of the respective series. In
the event that there is a default under the revolving line of credit, the
national bank may exercise its rights with respect to its security interest or
convert the outstanding debt into a capital contribution to Boston Capital and
become an investor therein in the series. The revolving line of credit is
non-recourse to Boston Capital, Boston Associates and investors.
LOANS TO OPERATING PARTNERSHIPS
In determining whether or not to acquire an interest in a particular operating
partnership, Boston Capital and/or Boston Associates and/or its affiliates may
make, or arrange for the making of loans, or option or deposit payments to one
or more operating partnerships and/or the applicable operating general
partner(s) prior to Boston Capital's acquisition of an interest(s). Boston
Capital and/or Boston Associates and/or its affiliate may also enter into
purchase contracts providing for a deposit.
The loan(s) may be repaid, with or without interest, by the applicable operating
partnership from capital contributions made by Boston Capital to the operating
partnership after the acquisition by Boston Capital of an interest therein.
In some cases, the interest expense incurred by Boston Associates and/or its
affiliates, in obtaining the funds with which to make such loan(s), may be
reimbursed to the applicable entity by Boston Capital.
63
<Page>
In any such case, any reimbursement of interest expense by Boston Capital
will be made only in the following circumstances:
- - after the acquisition by Boston Capital of an interest in the applicable
operating partnership, or in the event Boston Capital is unable or chooses
not to invest in the operating partnership to which funds were loaned, only
after such determination not to invest is made;
- - from net offering proceeds allocated to the category of Acquisition Expenses;
- - only in accordance with the applicable limitations on Front End Fees as set
forth in "Estimated Use of Proceeds."
Any interest charged by, or paid or reimbursed to, Boston Associates and/or its
affiliate(s) in connection with any loan(s) will not exceed the interest cost to
such entity(ies) in obtaining the funds with which to make such loan(s). The
amount paid for such an option, or the amount of such a contract deposit,
usually would not be returned if the investment were not made, and normally
would be credited against Boston Capital's agreed-upon capital contributions to
the applicable operating partnership if the investment were made. Boston Capital
also may incur other costs, such as inspections, market studies, and appraisals,
which cannot be recouped if Boston Capital determines not to invest in the
particular operating partnership under consideration.
Consistent with Boston Capital's investment objectives, Boston Associates has
discretion to select operating partnerships which have structured the financing
of the applicable apartment complexes in any manner and from any source that the
applicable operating general partner(s) believe(s) is feasible for the property,
and that Boston Associates believes is both (1) feasible for the particular
property, and (2) beneficial for investors. The financing may include, but is
not limited to, tax-exempt bond financing, balloon mortgages, variable interest
rates, renegotiable interest rates, deferral or principal payments and
wraparound loans.
CAPITAL CONTRIBUTIONS
We anticipate making our capital contributions to each operating partnership in
approximately four installments, although we may pay the entire capital
contribution to an operating partnership in full upon our admission as a limited
partner of such operating partnership. To the extent that capital contributions
to an operating partnership are made in multiple installments, such installments
are expected to be conditioned upon the occurrence of specific events pertaining
to qualifying for tax credits and/or to the construction or operation of the
apartment complex. We anticipate such events to include:
- - allocation of tax credits;
- - occupancy of dwelling units;
- - issuance of certificates of occupancy;
64
<Page>
- - construction loan closing;
- - admission of a series to the operating partnership as a limited partner;
- - substantial completion of construction or rehabilitation of the apartment
complex;
- - final closing or funding of the permanent mortgage loan;
- - operation of the apartment complex at a specified occupancy and/or at a net
income level for a specified period of time. The shorter the installment
period, the less opportunity we will have to condition our capital
contributions to an operating partnership and/or to currently reduce our
capital contributions to an operating partnership pursuant to the
above-described reduction provisions.
As a condition to Boston Capital's payment of the initial installment of capital
contribution to an operating partnership, Boston Capital is expected to receive
an opinion from counsel to the operating partnership which is anticipated to
state, among other things, that:
- - the interest of Boston Capital in the operating partnership is the interest
of a limited partner with no personal liability for the obligations of the
operating partnership;
- - the operating partnership has good and marketable legal title to the
apartment complex;
- - the operating partnership is duly formed under the laws of its state of
origin as a limited partnership.
The operating general partners are expected to make certain representations and
warranties to Boston Capital regarding, among other matters:
- - compliance with requirements of obtaining and retaining tax credits;
- - the status of the operating partnership as a limited partnership in good
standing;
- - the fact that there are no defaults existing or anticipated under any
material provisions of the project documents;
- - the net worth of the operating general partners;
- - adherence to certain standards with regard to the construction, or
rehabilitation, development and operation of the apartment complex.
Boston Capital will also require the delivery of the opinion of Counsel that,
assuming qualification for, and continuing compliance with the requirements of,
tax credits, it is more likely than not that an investor will be entitled to
his share of Boston Capital's share of tax credits generated by the apartment
complex.
65
<Page>
BOSTON CAPITAL'S LIMITED LIABILITY
Unless it is deemed, under applicable state law, that Boston Capital is taking
part in the management or control of an operating partnership's business, Boston
Capital will not have any liability for obligations of an operating partnership
beyond its agreed-upon capital contributions to the operating partnership.
Therefore, with the objective of limiting the liability of Boston Capital in
each operating partnership to the amount of its capital contributions to the
operating partnership, we anticipate that each Operating Partnership Agreement
will state that: (1) Boston Capital will have no right to take part in the
management or control of the business of the operating partnership, or to
transact any business in the name of the operating partnership, and (2) Boston
Capital will have certain rights under the terms of the Operating Partnership
Agreements, which are expected to include:
- - the right to approve or disapprove any sale or refinancing of the applicable
apartment complex;
- - the right to replace the applicable operating general partner(s) on the basis
of the performance and discharge of the operating general partner(s)'
obligations;
- - the right to approve or disapprove the dissolution of the applicable
operating partnership;
- - the right to approve or disapprove amendments to the Operating Partnership
Agreement materially and adversely affecting Boston Capital's investment in
the operating partnership;
- - the right to direct the operating general partners to convene meetings and to
submit matters to a vote.
In addition, Boston Capital and investors are expected to have access to the
books and records of the operating partnerships and to receive annual and
quarterly reports.
BCTC 94, Inc., a Delaware corporation, and an affiliate of Boston Associates,
may be a special limited partner in some operating partnerships, with the right
to become a general partner under limited circumstances relating to the
operating partnership's or the applicable operating general partner's failure to
perform its obligations under the applicable Operating Partnership Agreement.
THE OPERATING GENERAL PARTNERS
Under the terms of an Operating Partnership Agreement, we anticipate that the
operating general partner(s) will be required to assume responsibility for:
- - the achievement of permanent mortgage loan funding as to the applicable
apartment complex, including the provision of all funds in excess of
the construction loan, the permanent mortgage loan and net interim income
necessary to close, and obtain funding of, the applicable permanent mortgage
loan;
66
<Page>
- - the completion of the construction and development of the apartment complex
owned by such operating partnership, including the provision of all funds in
excess of proceeds of the construction loan and the permanent mortgage loan,
and other funds available therefor, necessary to pay all costs of such
construction or renovation, and thereafter;
- - the management and operation of the operating partnership, including the
oversight of the rent-up and operational stages of the apartment complex.
The Operating Partnership Agreement also is expected to provide for the
withdrawal of an operating general partner from the operating partnership upon
the election of the operating general partner, subject to certain conditions.
Upon such withdrawal, a substitute general partner, which may or may not be an
affiliate of the operating general partner, may replace the withdrawing
operating general partner.
FEES AND COMPENSATION ARRANGEMENTS WITH
OPERATING GENERAL PARTNERS AND THEIR AFFILIATES
In consideration for the operating general partner(s) performance of various
services to the operating partnership, including the numerous obligations set
forth above, the operating general partner(s) or their affiliates receive fees
paid from your investment and the cash flow of the apartment complex. These fees
typically include:
- - development fees;
- - incentive operating partnership management fees;
- - in certain cases, other fees for additional services.
The actual amounts of the fees for the apartment complexes are described in the
Supplement under the tabular section entitled "Terms of Investment in Operating
Partnerships."
In addition, for their services to an operating partnership, the operating
general partners or their affiliates will receive a certain percentage of the
cash flow from the operations of the operating partnership and/or available
proceeds resulting from the sale or refinancing of an apartment complex or the
liquidation of the operating partnership, after payment of certain priority
items. Further, the operating general partner(s) or their affiliates may receive
a real estate brokerage commission and/or a Sales Preparation Fee in connection
with the disposition of an apartment complex by the operating partnership, which
shall be limited to a competitive real estate commission, in an amount not to
exceed 6% of the contract price for the sale of the apartment complex.
Neither Boston Associates nor its affiliates will receive any such real
estate brokerage commission or Sales Preparation Fee.
67
<Page>
When the operating general partner's affiliate is the property manager for the
apartment complex, it receives a property management fee. The property
management fee to be paid for the apartment complexes is described in the
Supplement under the tabular section entitled, "Information Concerning the
Apartment Complexes."
We also anticipate that, as the operating general partners will have no direct
participation in Boston Capital or its affairs, including the offering, Boston
Capital and/or Boston Associates and/or its affiliates may indemnify the
operating general partners against liabilities arising from the offering and/or
Boston Capital's investment in an operating partnership, other than liabilities
arising from the operating general partners' negligence.
REGULATORY RESTRICTIONS
Each of the operating partnerships will be restricted in the manner in which it
can operate the applicable apartment complex under the terms of the permanent
mortgage loan documents and a Regulatory Agreement with the applicable state
agency allocating tax credits and/or any regulatory agency providing government
assistance. See "Tax Credit Programs--The Federal Housing Tax Credit" and
"Government Assistance Programs."
UNUSED OR RETURNED FUNDS
Any portion of the capital contributions received from investors with respect to
an applicable series of certificates available for the acquisition of operating
partnership interests which has not been so used, or committed for use, within
twenty-four months from the date of commencement of such series offering(s),
subject to Boston Capital's authority to substitute operating partnership
interests for previously identified operating partnership interests, shall be
promptly returned to investors in that series. If subsequent series of
certificates are offered, the funds will be returned only to the investors in
that series in which the funds were raised.
The return of funds that were otherwise available for investment in operating
partnership interests will include the return of funds used for any selling
commission, but will not include interest on those funds, as any interest will
be distributed as part of a series' net cash flow. Funds shall be deemed
committed for use if they are included in the Working Capital Reserve or if
written agreements in principle, commitment letters, letters of intent or
understanding, option agreements or any similar contracts or understandings with
respect to operating partnership interests have been executed, regardless of
whether these acquisitions are consummated.
If, for any reason, including legislative changes in the tax laws, acquisition
of operating partnership interests would no longer provide tax credits to the
investors, any funds which have not been used for investment in operating
partnership interests and which have not been deposited into
68
<Page>
the Working Capital Reserve will be promptly returned pro rata to investors,
less expenses of Boston Capital.
Any return of capital contributions previously made by Boston Capital to
operating partnerships during the first twenty-four months after the making of
such capital contributions, and any other funds which have been earned or
returned to Boston Capital with respect to operating partnership interests and
any liquidation, sale or refinancing proceeds otherwise received within
thirty-six months from Boston Capital's acquisition of operating partnership
interests shall, in the discretion of Boston Associates, be invested in
additional operating partnership interests, placed in the Working Capital
Reserve or returned to the investors in proportion to their respective capital
accounts as a return of the investors' money originally invested; provided
however, that in no event shall Boston Associates make any reinvestments in
operating partnership interests later than thirty-six months from the final
investment date. Any funds, which are not so invested or placed in the Working
Capital Reserve within six months of the completion of the construction period
of all of the apartment complexes owned by the operating partnerships, shall be
returned to investors in proportion to their respective capital accounts, as a
return of the investor's money originally invested; provided however, that a
sufficient portion of these funds shall be distributed to investors to cover
their estimated income tax liabilities, if any, arising out of the receipt of
the funds.
PRELIMINARY INVESTMENTS AND RESERVES
Until investor funds are released by the Escrow Agent to Boston Capital, they
will be invested in short-term certificates of deposit or time or demand
deposits in commercial banks and in short-term government securities
certificated by the full faith and credit of the United States Government.
Thereafter, uninvested funds, otherwise available for investment in operating
partnership interests, will be invested in permitted temporary investments.
Permitted temporary investments are short-term, highly liquid investments,
including without limitation, money market funds which invest in investment
grade debt securities. Boston Capital will establish the Working Capital Reserve
from the proceeds of this offering in an amount currently anticipated to be 4%
of the gross offering proceeds; in no event will the Working Capital Reserve
initially be established in an amount less than 4% of the gross offering
proceeds. The reserves may be used to cure any problems arising from the
apartment complexes; in addition, most apartment complexes will have their own
additional reserve requirements.
Boston Capital may also use funds held in the Working Capital Reserve for
options, loans and/or other payments and interest expense incurred which may
be necessary to secure the acquisition of operating partnership interests. To
the extent that the reserves are not needed for said purposes, they will be
utilized to pay Boston Capital's expenses, including the
69
<Page>
annual Fund Management Fee, to the extent other Boston Capital monies are not
available.
BORROWING POLICIES
Boston Capital will finance its investments entirely out of the net offering
proceeds. However, Boston Capital can incur indebtedness for:
- - the acquisition of operating partnership interests before sufficient net
offering proceeds have been raised as long as those loan(s) are repaid in
their entirety by Boston Capital from net offering proceeds and are
non-recourse to Boston Capital, Boston Associates and investors;
- - working capital purposes;
- - the prevention of default with respect to liens against the apartment
complexes, if any;
- - the discharge of such liens entirely or otherwise to protect Boston Capital's
investment in operating partnership interests.
Boston Capital may, but does not presently intend to, borrow from Boston
Associates or its affiliates. Any borrowing would be subject to the limitations
set forth under "Compensation and Fees."
OTHER POLICIES
- - Boston Capital will not issue senior securities; invest in other issuers for
the purpose of exercising control unless such investments meet the criteria
set forth in "Risk Factors--Joint Investment" or underwrite the securities of
other issuers or offer certificates in exchange for property.
- - Boston Capital and/or Boston Associates and/or its affiliates may agree to
make and/or guarantee certain interim loans which may be made to operating
general partners and/or the operating partnerships and/or prospective
operating partnerships not yet identified for possible investment by Boston
Capital, and/or the applicable operating general partner(s) ("development
loans"), and these development loans may be secured by payments of fees or
installments of capital contribution to be made to the operating general
partners or operating partnerships to the extent Boston Capital acquires an
operating partnership interest.
- - Boston Capital will not invest in operating partnership interests jointly
with other programs, except as described in "The Offering--Issuance of
Certificates in Series."
- - Boston Capital may not repurchase or otherwise reacquire certificates.
- - Boston Capital will distribute annually to investors certain reports
providing information as to each series of certificates, including audited
financial statements.
70
<Page>
- - Boston Capital may not sell, lease or lend its property to Boston Associates
or any affiliate of Boston Associates, or purchase or lease property from
Boston Associates or its affiliates, or acquire property from a program in
which Boston Associates or its affiliates have an interest.
- - Boston Capital, Boston Associates, and their affiliates may not sell property
to an operating partnership.
- - Boston Capital will not invest in real estate mortgages; however, the
operating partnerships in which Boston Capital intends to invest will own
apartment complexes that are subject to mortgage indebtedness.
- - Boston Capital will not loan any money to Boston Associates, its affiliates
or their officers, directors or equity owners.
INVESTMENT IN OPERATING PARTNERSHIPS
Boston Capital anticipates acquiring interests in operating partnerships that
will develop, or renovate or own an interest in apartment complexes generating
tax credits. The operating partnerships, the apartment complexes owned by the
operating partnerships, and the terms of the acquisitions, financing and
management are not presently known.
At such time during negotiations for any operating partnership interest with
respect to any series, when, in the opinion of Boston Associates, a reasonable
probability exists that the investment under negotiation will be made, this
Prospectus will be supplemented to describe the proposed investment and the
anticipated terms of the investment.
Upon the termination of any series offering period, we will make no further
supplements to this Prospectus to investors in that series. Investors will not
have any right to vote on or otherwise approve or disapprove any particular
investment to be made by Boston Capital. Investors should not rely upon the
initial disclosure of any proposed investment as an assurance that Boston
Capital will ultimately consummate that proposed investment, or that any
information provided concerning a proposed investment, including its agreed-upon
terms, will not change between the date of such information and actual
investment. Any supplement to this Prospectus relating to the offering of
subsequent series of certificates will set forth any standards that will be
applicable to substitution for operating partnership interests described
therein, if any.
71
<Page>
TAX CREDIT PROGRAMS
This section describes the federal housing tax credit program contained in
Section 42 of the tax code, as originally authorized by the Tax Reform Act of
1986 (the "1986 Tax Act"), and as modified by certain provisions of the
Technical and Miscellaneous Revenue Act of 1988 (the "1988 Tax Act"), the
Omnibus Budget Reconciliation Act of 1989 (the "1989 Tax Act"), the Omnibus
Budget Reconciliation Act of 1990 (the "1990 Tax Act"), the Omnibus Budget
Reconciliation Act of 1993 (the "1993 Tax Act") and the Economic Growth and Tax
Relief Reconciliation Act of 2001 (the "2001 Tax Act"). The changes to the
program occasioned by the 1989 Tax Act and the 1990 Tax Act generally are
effective only with respect to apartment complexes which receive allocations of
tax credits after 1989 or 1990, respectively. Such apartment complexes are
hereinafter referred to as "New Projects." Except as noted below, operating
partnerships may use the tax credit in conjunction with other government
assistance programs that are described in the section entitled "Government
Assistance Programs."
THE TAX CREDIT
The 1986 Tax Act created a major government-assisted housing program with
respect to low income housing that is constructed, rehabilitated or acquired
after December 31, 1986, by providing a tax credit to investors in certain low
income housing projects. The tax code provided that the tax credit be allocated
by states, or in some cases local agencies, with a volume cap of $1.75 annually
per resident of the state for each year, but only the credit arising in the
first year of an apartment complex's credit allocation is counted against this
limit. Beginning in 2003, the volume cap was indexed for inflation. In addition,
smaller states are now entitled to $2,000,000 of tax credits regardless of the
state's population as a minimum amount allocated annually. Once the tax credit
is allocated to a particular building, the building owner does not need to
reapply for the credit in later years, nor does the aggregate amount of the
credit allocated to such building for later years reduce the amount of credits
available for allocation to other apartment complexes in later years.
Properties financed with the proceeds of tax-exempt bonds fall outside of this
allocation restriction if 50% or more of the costs of the property are so
financed.
Unlike other federal housing programs that are administered by USHUD or the
Rural Housing Service of the U.S. Department of Agriculture (formerly known as
the Farmers Home Administration) ("RHS"), this program is administered by the
U.S. Department of the Treasury (the "Treasury Department"). As of the date of
this Prospectus, the Treasury Department has issued regulations pertaining to a
portion of the program; proposed regulations covering other important
programmatic aspects have not been
72
<Page>
published and it cannot be predicted when such proposed regulations will be
promulgated or what specific subjects will be covered. Accordingly, the program
description set forth below is general and is based on the partial program
regulations and statutory text, as amplified by the legislative history
published in conjunction with the 1986 Tax Act, the 1988 Tax Act, the 1989 Tax
Act, the 1990 Tax Act and the 1993 Tax Act.
SUMMARY OF THE TAX CREDIT PROGRAM
For a ten-year period known as the credit period, investors in a partnership
that owns an apartment complex providing low-income housing units are eligible
to receive a credit against federal tax liability, i.e., a dollar-for-dollar
reduction in that liability. The annual amount of this tax credit is determined
by multiplying the annual credit percentage (the "applicable percentage") by the
basis of that portion of an apartment complex which is occupied by low-income
tenants (the "Qualified Basis," discussed below under "Eligible Basis and
Qualified Basis").
The applicable percentage varies essentially according to two major factors: (a)
whether an apartment complex is newly constructed, which includes certain
substantially rehabilitated apartment complexes, or is an existing apartment
complex, and (b) whether or not an apartment complex is federally subsidized.
There are three basic tax credit categories:
(1) Non-federally subsidized new construction or substantial rehabilitation
apartment complexes receive a tax credit in an amount up to a present value
over ten years of 70% of the Qualified Basis of the apartment complex (the
"70% Credit"). The 70% figure is the applicable percentage expressed in
present value terms, assuming the credit is received over ten years. The
Treasury Department is required on a monthly interval to re-determine the
appropriate yearly percentage that will yield a 70% present value over ten
years, utilizing a prescribed discounting methodology based on the
applicable federal rate of interest in effect in that month. Once
established in the month an apartment complex is placed in service, the
applicable percentage will apply to the entire credit period. For apartment
complexes placed in service in December 2003, for example, the applicable
percentage is equal to 8.01%.
Substantial rehabilitation is defined in the tax code as capital expenditures in
connection with rehabilitation of a building, excluding the acquisition costs
aggregated over a period of up to twenty-four months of at least $3,000 per low
income unit or 10% of the owner's basis in the apartment complex, whichever is
higher. The 70% Credit for substantial rehabilitation may be utilized by an
owner of an existing apartment complex without any transfer of ownership, or it
may be utilized by a new owner after a change of ownership.
73
<Page>
The 1988 Tax Act permits the taxpayer to elect to use, in lieu of the applicable
percentage for the placed-in-service date, the applicable percentage for the
month in which a binding agreement as to the building's credit allocation is
entered into between the taxpayer and the appropriate credit agency. In
addition, if the building is financed by the proceeds of tax-exempt bonds, the
taxpayer may elect to utilize the applicable percentage in effect for the month
the bonds were issued.
(2) Federally subsidized new construction or substantial rehabilitation
apartment complexes receive a tax credit in an amount up to a present value
over ten years of 30% of the Qualified Basis of the apartment complex (the
"30% Credit"). As with the 70% Credit, the Treasury Department is directed
to determine the appropriate percentage for apartment complexes placed in
service in order to yield a tax credit with a 30% present value; for
example, for apartment complexes placed in service in December 2003, the
applicable percentage is 3.43%.
For purposes of the federal housing tax credit program, federal subsidies
include only financing received from the proceeds of tax-exempt bonds and
financing from direct or indirect federal loans with below market interest
rates--such as the RHS Permanent Mortgage Loans anticipated to be obtained with
respect to some of the apartment complexes--proceeds of which are or were used
directly or indirectly with respect to the apartment complex. In some respects,
the use of the term "federally subsidized" in Section 42 of the tax code is
narrower than its customary definition. For example, subsidies under the USHUD
Section 8 Program and Community Development Block Grant funds are not considered
federal subsidies for purposes of the tax credit. See "Government Assistance
Programs" for a discussion as to whether a particular program is considered
federally subsidized within the meaning of the Tax Reform Act of 1986.
An owner has the option of excluding federally subsidized loans from basis in
calculating the credit amount and then using the 70% Credit against the
remaining basis.
(3) Existing apartment complexes are eligible to receive the 30% Credit upon
acquisition by new owners; provided however, that an owner also must
accomplish substantial rehabilitation in order to receive the 30%
acquisition credit. Existing apartment complexes are not eligible for the
30% Credit if the apartment complex was transferred, or if it underwent
certain rehabilitation work, during the prior ten years, although the
Treasury Secretary may waive this rule with respect to certain federally
assisted or federally financed properties in order to avert certain mortgage
assignments or claims against federal mortgage insurance funds or in certain
other instances of financial distress. The 1989 Tax Act broadened this
waiver authority to include properties purchased from failed thrift
institutions, their receivers or conservators,
74
<Page>
or in order to preserve low income occupancy for certain federally assisted
properties, effective upon enactment of the 1989 Tax Act. The owner of such
an apartment complex may also utilize the 70% Credit with respect to the
expenditures incurred to perform the required substantial rehabilitation, if
such expenditures are not federally subsidized.
In addition to the three basic credit percentages, an owner may elect to make
more of an apartment complex eligible for the tax credit after the ten-year
credit period has already begun. The so-called "addition to Qualified Basis"
provides an additional credit equal to two-thirds of the applicable percentage
noted above, applied to the amount of such addition to Qualified Basis; any such
additional credits are to be claimed and such credits are received over the
remainder of the fifteen-year compliance period. Such additional credits, under
certain circumstances, are subject to the state credit allocation described in
"Tax Credit Programs--Credits Subject to State Allocation," but are not subject
to recapture.
QUALIFIED APARTMENT COMPLEXES
The tax credit is available only with respect to buildings in qualified
low-income housing apartment complexes. Qualified low-income housing apartment
complexes are generally residential rental properties in which (1) 20% or more
of the aggregate residential rental units are occupied by individuals with
incomes of 50% or less of area median income, as adjusted for family size (the
"20-50 Set-Aside Test"), or (2) 40% or more of the aggregate residential rental
units are occupied by individuals with incomes of 60% or less of area median
income, as adjusted for family size (the "40-60 Set-Aside Test"). In each case,
the units are rent-restricted.
This requirement, referred to as the Minimum Set-Aside, must be met in order for
any portion of the apartment complex to qualify for tax credits. All low income
units must be suitable for occupancy, must be used on a non-transient basis, and
must be offered to the general public. Once the Minimum Set-Aside has been
satisfied, all other low income units meeting the Minimum Set-Aside will be
taken into account in determining the Qualified Basis and hence, the amount of
tax credits that are available. See "Tax Credit Programs--Eligible Basis and
Qualified Basis."
Additionally, the gross rent paid by tenants of qualified low-income units
cannot exceed 30% of the applicable qualifying income for a family of its size
(the "Rent Restriction Test"). The Rent Restriction Test is based on the number
of bedrooms in a unit, with an assumed number of occupants for each type of
unit. Thus, as an example, all two bedroom units in a given apartment complex
will have the same rent, based upon the assumption that three people occupy the
unit, regardless of the actual number of residents.
Gross rent for this purpose includes the cost of any utilities, other than
telephone. The Internal Revenue Service has issued a Notice (No. 89-6) stating
that owners must generally follow USHUD, RHS or local housing
75
<Page>
authority utility allowances, depending on the type of building involved, and
whether the tenant directly pays the cost of any utilities except telephone.
Rental assistance payments such as those under the USHUD Section 8, Rent
Supplement or Rental Assistance Payments Programs, described below in this
section, and similar state or local rental subsidy programs, are not included in
gross rent and thus an owner may receive a rental subsidy payment under such a
program in addition to the amount paid by the tenant.
The Internal Revenue Service has issued a Notice (No. 89-6) stating that the
cost of any services, such as meals or social services, that are paid by the
tenant on a mandatory basis, must be included in the gross rent. However, the
1989 Tax Act allows certain fees paid to owners by governmental agencies or
non-profit organizations for support services to tenants--which services allow
residents to live independently--to be excluded from gross rent with respect to
new projects.
Pursuant to Section 42(g)(3) of the tax code, an apartment complex must, in
general, meet the requirements with respect to the 20-50 Set-Aside Test or 40-60
Set-Aside Test, as well as the Rent Restriction Test, not later than at the end
of the first year of the credit period. Special rules are provided in the case
of apartment complexes that consist of multiple buildings.
The taxpayer may elect whether it will meet the 20-50 Set-Aside Test or the
40-60 Set-Aside Test; but once made, the election is irrevocable. The apartment
complex must remain in compliance with the rules governing the federal housing
tax credit program for a period of fifteen years, commencing with the beginning
of the credit period, which is the first year the credit is taken with respect
to a building. Boston Capital intends to require the operating general partners
of each operating partnership in which it invests to represent that either the
20-50 Set-Aside Test or the 40-60 Set-Aside Test will be met by the end of the
first year of the credit period.
For projects substantially rehabilitated, there is a separate fifteen-year
compliance period that commences in the year that the substantial rehabilitation
is completed. Thus, with respect to a building undergoing substantial
rehabilitation, the effective compliance period will be increased by the time
differential between acquisition and the completion of the substantial
rehabilitation. With respect to new projects, the credit period for the 30%
Credit for acquisition may not commence until the tax credit for substantial
rehabilitation is allowed.
The 1989 Tax Act provides for an extension of the compliance period for new
projects. Under this provision, the credit agency and owner must enter into an
agreement establishing an extended compliance period of at least thirty years.
The owner of a property, however, may, one year prior to the end of the
fifteen-year compliance period, request that the credit
76
<Page>
agency present a contract to purchase the apartment complex or the low-income
portion of the apartment complex. The purchase price would be equal to the sum
of (1) the outstanding mortgage debt on the property, (2) the cash invested with
respect to the apartment complex, increased by a cost of living adjustment, not
to exceed 5% in any year, plus (3) other capital contributions, minus (4) cash
distributions from or available for distribution from, the apartment complex.
In the event that the apartment complex is not initially occupied entirely by
low income tenants, this provision relates only to the low-income portion of the
apartment complex. If the credit agency does present such a contract to the
owner, the apartment complex can be sold for that price, but the apartment
complex would continue to be subject to the restrictions of the federal housing
tax credit program for at least a total of thirty years, including the initial
fifteen-year compliance period. If no contract is presented, then the owner may
sell the apartment complex at any price obtainable and without use restrictions
or convert it to market rate use, with the qualification that existing low
income tenants may not be evicted--except for good cause--or have their rents
raised beyond amounts allowed under the Rent Restriction Test for a three-year
period after the initial fifteen-year compliance period. Furthermore, the
low-income restrictions would terminate upon a foreclosure or deed-in-lieu of
foreclosure.
ELIGIBLE BASIS AND QUALIFIED BASIS
The Qualified Basis of a building within a qualified low-income housing
apartment complex is defined generally as the portion of the Eligible Basis in a
qualified building attributable to low-income rental units. This proportion is
the lesser of (1) the proportion of occupied low-income units to all residential
rental units, whether or not occupied, or (2) the proportion of floor space in
the occupied low income units to the total floor space of the residential rental
units, whether or not occupied, in the building.
In general, the Eligible Basis of a building within a low income housing
apartment complex is its adjusted basis. With respect to new construction,
Eligible Basis will be the cost of new construction determined as of the end of
the first year of the credit period, under an amendment contained in the 1989
Tax Act, effective retroactively to 1987. For substantial rehabilitation,
Eligible Basis would be comprised of rehabilitation costs aggregated over a
period not exceeding twenty-four months, which expenditures meet the threshold
levels described under "Summary of the Federal Housing Tax Credit Program." No
acquisition credit is allowable in the absence of substantial rehabilitation.
77
<Page>
Land costs may not be included in Eligible Basis. Because only the adjusted
basis of a building may be included in Eligible Basis, adjustments to basis
described under Section 1016 of the tax code, except for depreciation, must be
taken into account. For example, the reduction in basis equal to any historic
tax credit allowed with respect to an apartment complex would be taken into
account when computing Eligible Basis. In contrast, the tax credit does not
reduce a building's basis.
Further, for purposes of determining Qualified Basis, the Eligible Basis
includes not only the adjusted basis of the residential rental units, but also
the adjusted basis of facilities and certain personal property, such as major
appliances, for use by the tenants, as well as other facilities reasonably
required by the apartment complex.
The IRS has recently released a series of technical advice memoranda ("TAMs")
regarding the inclusion Eligible Basis of certain soft costs, including but not
limited to, construction period costs, impact fees, financing costs, land
preparation costs, development fees and bond costs. In general, the TAMs provide
that: (1) land preparation costs are includable in Eligible Basis only to the
extent that they are so closely associated with a depreciable asset that they
would have to be retired, abandoned or replaced contemporaneously with that
depreciable asset, otherwise they are treated as part of the cost of land, (2)
deferred development fees may be included in Eligible Basis under appropriate
circumstances, the most important of which is that the deferred amount is
reasonably certain to be paid, (3) development fees must be allocated among
different assets and may not necessarily be entirely includable in Eligible
Basis, and (4) construction period interest must be capitalized and allocated
among produced property which includes land, building and site improvements, a
portion of which may be included in Eligible Basis, although no part of bond
issuance costs may be so included. Such TAMs are applicable only to the taxpayer
involved, and do not necessarily reflect the state of the law and cannot be
cited as legal precedent, although they are generally considered to evidence the
view of the IRS on the issues addressed. The IRS may contest the ability to
include deferred development fees, payable from future capital contributions to
the operating partnership or from cash flow of the operating partnership. In
Eligible Basis because payment of such amounts may depend on the operating
performance of the apartment complex and therefore may be too contingent to
accrue. Deferred development fees may also result in a deferral of the
utilization of tax credits with respect to costs funded by such fees under the
at-risk rules applicable to closely-held C Corporations.
Residential rental property may qualify for the tax credit even though a portion
of the building in which the residential rental units are located is available
for commercial use. However, no portion of the cost of such
78
<Page>
non-residential property may be included in the Eligible Basis. The Statement of
Managers of the 1986 Tax Act states the intention of Congress that the costs of
such mixed use facilities would be allocated according to a reasonable method
that properly reflects proportionate benefit to be derived directly or
indirectly by the non-residential rental property and the residential units. The
portion of the cost of apartment complexes owned by operating partnerships
allocable to commercial space, if any, may be determined on a pro rata basis
using a ratio of the square footage of commercial space to the total square
footage of the apartment complex.
Eligible Basis may not include in any taxable year the amount of any federal
grant, regardless of whether such grant is includable in gross income. A federal
grant--as opposed to a loan or a rental subsidy--includes any grant funded in
whole or in part by the federal government, to the extent funded with federal
funds. Grants which may not be included in Eligible Basis include any Urban
Development Action Grants, Rental Historic Grants and Housing Development Action
Grants.
USE OF THE TAX CREDIT
Taxpayers who own an interest in a qualified low-income apartment complex over a
ten-year period can claim tax credits. In the first year the tax credit is
claimed, the allowable tax credit amount is determined using an averaging
convention to reflect the number of months that units comprising the Qualified
Basis were occupied by low-income individuals during the year and is reduced to
reflect the period of time during the first year that the operating partnership
owned the building(s) in question.
For example, if half of the low-income units included in Qualified Basis were
first occupied in October and the remaining half were first occupied in
December, the allowable tax credit in the first year would reflect that these
units were occupied on average only two months or one-sixth of the year for a
calendar year owner. As another example, if an operating partnership purchased a
fully occupied building on July 1 and the building remained fully occupied
throughout that first year, the allowable tax credit to the applicable operating
partnership in that first year would be equal to one-half of the total tax
credit for which the building would be eligible for that year.
To the extent that there is such a reduction of the tax credit amount in the
first year, an additional tax credit in the amount of that reduction is
available in the eleventh taxable year. Furthermore, a partner's allocable share
of tax credit in the year in which that partner is admitted or a year in which
the partner disposes of his interest will be determined under general
partnership allocation rules, according to the legislative history accompanying
the 1986 Tax Act. Thus, the amount of tax credit available to an investor will
be affected not only by the first year averaging convention
79
<Page>
described in this paragraph, but also by the period of time an investor holds an
interest in Boston Capital during any particular year in the credit period. See
"Federal Income Tax Matters--Allocation of Profits, Credits and Losses to
Investor in Year of Purchase of Certificates" and "--Allocation of Profits,
Credits and Losses Upon Sale of Certificates."
In order to use the tax credit fully, a taxpayer who is an individual, an S
Corporation or a closely held corporation other than a leasing company must be
at risk with respect to his investment in such low-income housing.
Generally, the qualified basis of any low-income housing apartment complex is
reduced for at-risk purposes by the amount of any non-qualified nonrecourse
financing with respect to that property. Such a reduction would reduce a
partner's qualified investment in a low-income apartment complex and therefore,
directly reduce such partner's share of any tax credit.
Qualified commercial financing is not considered non-qualified nonrecourse
financing, and therefore a taxpayer will be considered to be at-risk for
purposes of the tax credit with respect to such financing. For purposes of the
tax credit, qualified commercial financing is defined as financing with respect
to any property if (1) the property is acquired by the taxpayer from a person
who is not a related person, and (2) the financing is borrowed from a qualified
person or represents a loan from any federal, state or local government
instrumentality.
A qualified person for purposes of the tax credit is a person who is actively
and regularly engaged in the business of lending money and who is not (1) the
person from whom the taxpayer acquired the property, or (2) a person who
receives a fee with respect to the taxpayer's investment in the property.
CREDITS SUBJECT TO STATE ALLOCATION
All buildings, except those financed through proceeds of tax-exempt bonds
subject to the tax-exempt bond limitation included in the tax code, must be
allocated tax credit authority by the applicable state or local credit agency in
the jurisdiction in which the apartment complex is located. Boston Capital will
only acquire interests in operating partnerships owning apartment complexes
which have received a preliminary tax credit allocation by the appropriate
credit agency. Although an actual allocation of tax credit authority may not be
made until the year a building is placed in service, credit agencies are
permitted to enter into binding commitments to allocate future credit authority.
A provision contained in the 1988 Tax Act allows an allocation to be made if an
owner's basis in the apartment complex, including the cost of land, at the close
of the allocation year is more than 10% of the reasonably anticipated basis in
such apartment complex as of the close of the second year after the allocation
year, and the building is placed in service by the close of the second year
following the allocation.
80
<Page>
Furthermore, the possibility exists that an existing building may receive an
allocation for a year but not meet the 10% requirement described in the
immediately preceding paragraph and not be placed in service until the following
year, in which case under present law, the allocation would be lost and there is
no assurance that the credit agency would make credit available during the
following year. We anticipate that each of the Operating Partnership Agreements
will provide that we may require the operating general partner(s) to repurchase
our interest in the operating partnership in the event that the apartment
complex is not placed in service in the year for which the tax credit is
allocated and does not meet the above-described 10% test. In addition, the
credit agency is required to reduce the applicable percentage and/or the
Qualified Basis from the amounts for which the apartment complex would otherwise
be eligible if the credit agency believes that the full amounts are not
necessary in light of other sources of assistance which are available to the
apartment complex.
QUALIFIED ALLOCATION PLANS
Credit agencies must publish, after public comment is received, qualified
allocation plans which set forth selection criteria to be used in determining
housing priorities of the credit agency. The 1989 Tax Act mandates that, during
the stage at which the credit agency is determining which apartment complexes to
select for an allocation, it give preference to apartment complexes that serve
the lowest income tenants for the longest periods of time.
The credit agencies also must take other criteria into account in selecting
apartment complexes for an allocation. Boston Associates is unable to predict
what impact, if any, this entire provision will have with respect to any
apartment complex or the availability of apartment complexes for investment.
Furthermore, the 1989 Tax Act requires that for new projects, credit agencies
evaluate certain financial information relating to apartment complexes and
allocate tax credits in an amount that does not exceed the amount determined
necessary for the financial feasibility and long-term viability of the apartment
complex. In making this determination, the credit agency must consider the
following:
- - source and use of funds;
- - total financing for the apartment complex;
- - proceeds expected to be generated as a result of tax benefits;
- - the percentage of tax credits used for project costs other than the cost of
intermediaries.
Boston Associates is unable to predict how this provision will affect any
apartment complex or the availability of apartment complexes for investment.
However, each state credit agency has adopted a qualified alloca-
81
<Page>
tion plan and has procedures in place for analyzing the amount of tax credits
to be allocated, which plans and procedures differ in many respects from each
other. In addition, pursuant to the 1989 Tax Act, credit agencies have
procedures in place to monitor compliance affirmatively and to report any
noncompliance with the tax credit program to the IRS.
HISTORIC TAX CREDIT
The tax code also provides for a separate tax credit equal to 20% of qualified
rehabilitation expenditures for certified historic structures and certain other
buildings originally placed in service before 1936 (the "historic tax credit").
Certain of the apartment complexes may qualify for this credit in addition to
the tax credit. A certified historic structure is defined as a building which
(1) is listed in the National Register of Historic Places, or (2) is located in
a registered historic district and is certified by the Secretary of the Interior
as being of historic significance to the district. Qualified rehabilitation
expenditures are defined as amounts properly chargeable to the capital account,
incurred for real property, and made in connection with a qualified
rehabilitated building. In general, a qualified rehabilitated building is one
that has been substantially rehabilitated. The rehabilitation also must be
certified rehabilitation, which is rehabilitation certified by the Secretary of
the Interior as consistent with the historic character of the property or the
district in which the property is located. Costs of acquiring a building or
enlarging it are not qualified rehabilitation expenditures.
The tax basis of a rehabilitated structure is reduced by 100% of the allowed
historic tax credit. Accordingly, the basis of an apartment complex receiving
historic tax credits could be reduced for purposes of computing the tax credit
for the year.
The use of the historic tax credit by individuals, including shareholders of S
Corporations or closely held corporations, is limited by the amount that the
taxpayer has at-risk with respect to the investment that generates the historic
tax credit. In general, the taxpayer must satisfy the same at-risk requirements
applicable to the tax credit. See "Federal Income Tax Matters--At-Risk
Limitations." In addition, to be considered at-risk with respect to an
investment which generates historic tax credits, it is also necessary that (1)
the amount of any nonrecourse financing with respect to the property not exceed
80% of the credit base of the property, and (2) the financing not be provided by
a person who is related to the taxpayer.
Historic tax credits used by investors are subject to full or partial recapture
by an investor who transfers one-third or more of his certificates within five
years of the date which the applicable apartment complex was placed in service,
in proportion to the percentage of certificates so transferred. In addition, if
an apartment complex is sold or otherwise disposed of during this five-year
period, the historic tax credits will be recaptured in an
82
<Page>
amount that varies depending on the date of sale or disposition. See "Federal
Income Tax Matters--Recapture of Tax Credits."
GOVERNMENT ASSISTANCE PROGRAMS
The tax credit can be used in conjunction with apartment complexes that are not
government assisted as well as those that receive assistance from federal, state
or local governments. Boston Capital intends to acquire interests in operating
partnerships owning apartment complexes that are assisted by federal, state or
local programs, although we may invest in non-assisted apartment complexes as
well. Following is a summary of various major government assistance programs now
in existence which can be used with the tax credit.
In order to qualify for tax credits, an operating partnership and its related
apartment complex must meet the basic rules for the federal housing tax credit
program set forth in the tax code in addition to the applicable administrative
rules for the housing assistance programs discussed in this section. There are
presently some inconsistencies between the federal housing tax credit program
requirements and certain other government assistance program rules which will
complicate or block the full use of some assistance programs.
Although the following discussion presents several examples of the
inconsistencies, it is not inclusive. At the present time, the procedures for
the resolution of inconsistencies and the likelihood of favorable clarification
are not clear. Furthermore, there can be no assurance that the terms of the
applicable programs, or the regulations governing them, will not change. Boston
Associates is unable to predict at this time which of the government assistance
programs described below will be utilized with respect to apartment complexes
owned by the operating partnerships in which Boston Capital may undertake to
acquire interests.
RURAL HOUSING SERVICE ("RHS") PROGRAMS
Section 515 of the Housing Act of 1949 authorizes the U.S. Department of
Agriculture to provide direct below-market-rate mortgage loans for rural rental
housing. As of May 1, 1995, the responsibility for administration of the Section
515 program has been reassigned to RHS. Such loans are extended to qualified
sponsors, organized exclusively for the purpose of providing housing, in amounts
up to 97% of the total development cost of the applicable apartment complex, as
determined pursuant to RHS regulations, and for terms up to fifty years. In
addition, RHS may provide an owner with mortgage interest subsidies, which
effectively lower the interest rate on a permanent mortgage loan made by RHS to
1% after the satisfactory completion of construction of the apartment complex,
the benefits of which the owner must pass on to eligible tenants in the form of
lower rents.
83
<Page>
RHS regulations limit cash distributions to owners of apartment complexes which
it finances with both mortgage loans and interest subsidies to a maximum annual
return of 8% per annum, on a cumulative basis, on the required 3% to 5% equity
contribution. RHS also requires that monthly payments to a reserve account be
made until the maximum amount of 10% of the total construction cost of the
apartment complex has been set aside.
An owner wishing to sell the apartment complex must obtain RHS approval. For
apartment complexes funded after December 21, 1979, applicable law and
regulations also require the owner to utilize the assisted housing for tenants
eligible under the Section 515 Program for the twenty-year period following the
closing of the RHS mortgage. With respect to apartment complexes funded before
December 21, 1979, Congress, in the Housing and Community Development Act of
1987, adopted a measure to preserve the low income tenancy of the apartment
complex by requiring that the owner sell the apartment complex at its fair
market value to a non-profit organization rather than prepay the loan, or
otherwise accept incentives for the extension of low income use restrictions, to
the extent available. On November 21, 1989, Congress passed the Department of
Housing and Urban Development Reform Act of 1989 (the "1989 USHUD Act").
Pursuant to the 1989 USHUD Act, loans obligated after December 15, 1989, provide
that the owner cannot prepay during the fifty-year term of the mortgage.
Although a RHS mortgage may not be prepaid during its fifty-year term, an owner
may sell or otherwise transfer its apartment complex upon RHS approval, subject
to the mortgage. Furthermore, RHS approval is required before an owning
partnership may encumber title to its apartment complex, admit or remove a
general partner or permit a general partner to maintain a certain percentage
interest in that operating partnership.
Section 515 apartment complexes are eligible only for the 30% credit, because
they are the beneficiaries of a federal below-market-rate loan.
USHUD MORTGAGE LOAN INSURANCE PROGRAMS AND
INSURANCE SUBSIDY PROGRAMS
Boston Capital may invest, through operating partnerships, in apartment
complexes having mortgage loans which are insured by USHUD. Such mortgage
insurance by itself is not considered a federal subsidy for purposes of the
federal housing tax credit program, and USHUD-insured apartment complexes having
no other federal subsidy would be eligible for the 70% credit. However, Boston
Capital currently anticipates that any USHUD-insured apartment complexes it
invests in would have additional federal, state or local assistance, so that the
applicable credit would be either the 30% or the 70% credit, depending upon the
particular form of assistance.
84
<Page>
(1) SECTION 221(d)(4) MORTGAGE INSURANCE PROGRAM. Section 221(d)(4) of the
National Housing Act of 1934, as amended, provides for federal insurance of
private construction and permanent mortgage loans to finance new or
rehabilitated rental apartment complexes containing five or more units. This
program provides housing for families of moderate income, families eligible
for assistance under the USHUD Section 8 Program and families that have been
displaced as a result of urban renewal, government action or disaster.
Under USHUD regulations, the amount of any USHUD-insured mortgage loan cannot
exceed the lesser of the amount of the USHUD insurance commitment, as amended
from time to time, or 90% of the replacement cost of the apartment complex, as
determined by a certified public accountant following the accounting procedures
specified by USHUD. Under current regulations, the maximum interest rate that
may be charged on the mortgage loans insured by USHUD shall be at the rate
agreed to by the borrower and the lender. Further, USHUD must approve each
disbursement made from the construction loan, and determine when the apartment
complex is 100% complete.
A permanent mortgage loan insured under Section 221(d)(4) is to be repaid over a
term not to exceed forty years from the final closing date. Payments of
principal, interest and USHUD mortgage insurance premiums are to be made in
equal monthly installments. Under the terms of USHUD-approved loan documents
applicable to this mortgage insurance program, neither an owning partnership nor
any partner of such partnership will have personal liability to repay the
construction or permanent mortgage loans or to pay the interest on such loans.
Under current USHUD regulations, up to 15% of the original principal amount of
the permanent mortgage loan may be prepaid at any time, in any one calendar
year, without penalty. A mortgage loan insured under Section 221(d)(4) may be
prepaid without the consent of USHUD. This prepayment right may be prohibited
by, or subject to the approval of, USHUD and the lender, in the case of
apartment complexes financed with tax-exempt bonds. In those cases when the
Government National Mortgage Association ("GNMA") is the "take-out" lender and
purchases the permanent mortgage loan from a private mortgagee at final closing,
GNMA imposes a 3% penalty (which penalty declines at the rate of one-eighth of
1% per year) which is charged for any prepayment made in excess of the allowable
15% in any year prior to the twenty-fourth anniversary of the date of the
mortgage note. In cases where the permanent mortgage loan is held by other
parties, a prepayment penalty also may apply.
At the initial closing of a USHUD-insured apartment complex mortgage loan, USHUD
and the apartment complex owner enter into a Regulatory
85
<Page>
Agreement. Operation and sale, transfer or other disposition of the apartment
complex, or change in the ownership of the apartment complex, are governed by
the terms of such Regulatory Agreement.
Under current USHUD regulations, rental rates for an apartment complex are
initially determined by USHUD with the objectives of not exceeding apartment
complex rents for comparable units in the same market area at the estimated time
of occupancy and of providing some cash available for distribution after payment
of mortgage interest and principal, USHUD mortgage insurance premium, required
reserve fund deposits, and estimated operating expenses. All rent increases must
be approved by USHUD prior to their becoming effective unless, pursuant to USHUD
regulations effective in 1983, an owner has exercised its authority to establish
alternative rents and charges. Where an owner makes an election of deregulation
of USHUD rent procedures, local rent control may apply to the apartment complex.
In the event of a default by the mortgagor of a USHUD-insured mortgage loan,
which is not cured within thirty days or such extended time period to which
USHUD and the mortgage lender consent, the mortgage lender has the right to
elect either to foreclose upon the mortgage securing the loan, or to assign the
loan to USHUD in return for payment of its insurance benefits. If the loan is
assigned to USHUD, the owner retains legal title to the apartment complex.
However, if the default continues, USHUD may foreclose upon the mortgage and
become the legal owner.
(2) SECTION 220 MORTGAGE INSURANCE PROGRAM. Section 220 of the National Housing
Act, as amended, provides for federal insurance of private mortgages in a
similar manner to Section 221(d)(4), but is restricted to residential
property in certain urban areas that are in need of revitalization. The
requirements and conditions under Section 220 are otherwise substantially as
described above for the Section 221(d)(4) mortgage insurance program.
(3) SECTION 236 MORTGAGE INSURANCE AND SUBSIDY PROGRAM. Section 236 of the
National Housing Act, as amended, also provides for federal insurance of
private mortgages with terms of up to forty years for up to 90% of the
replacement cost of apartment complexes. Rentals for applicable apartment
complexes were required to be initially established so that, at 95%
occupancy, after payment of mortgage interest and principal payments,
reserves, and operating expenses, the cash available for distribution to the
owner would not exceed a 6% return on its USHUD-determined equity investment
in such apartment complex, although shortfalls in any year may be paid in
subsequent years.
The Section 236 program also provides interest subsidies, which are interest
reduction payments from USHUD to the public or private lender, on
86
<Page>
behalf of the apartment complex owner, in the amount of the difference between
the payment required for principal, interest and USHUD mortgage insurance
premiums on the permanent mortgage loan, and that which would be required if the
permanent mortgage loan carried an interest rate of 1% per year. The owner must
pass on the benefits of the interest rate subsidy to the eligible tenants in the
form of lower rents.
(4) SECTION 221(d)(3) MORTGAGE INSURANCE PROGRAM AND 221(d)(3) (BMIR) SUBSIDY
PROGRAM. Section 221(d)(3) of the National Housing Act, as amended, provides
for federal insurance of private mortgages in a manner similar to the
Section 221(d)(4) mortgage insurance program, but allows for insurance of
100% of the total development cost of apartment complexes for non-profit and
cooperative mortgagors. In addition, the statutory maximum mortgage amount
per dwelling unit is less for Section 221(d)(3) than for Section 221(d)(4).
Section 221(d)(3) mortgage loan insurance may be obtained by public
agencies, non-profit, limited dividend or cooperative organizations, and
private builders or investors who sell apartment complexes to those
organizations.
(5) SECTION 223(f) MORTGAGE INSURANCE-PURCHASE AND/OR REFINANCING OF EXISTING
APARTMENT COMPLEXES. Pursuant to Section 223(f) and Section 207 of the
National Housing Act, as amended, USHUD provides for federal insurance of
private mortgage loans in connection with the purchase and/or refinancing of
existing apartment complexes. This program is intended to provide for the
preservation of existing housing and neighborhoods through moderate
rehabilitation of the property and improved maintenance and management. If
an apartment complex were "substantially rehabilitated" under the tax code
definition using financing pursuant to the Section 223(f) program, the 70%
Credit would be applicable with respect to the rehabilitation expenditures.
Under USHUD regulations, the apartment complex must be at least three years old,
consist of five or more dwelling units, generally, have attained an occupancy
level which produces rental income sufficient to pay operating expenses and
annual debt service, and have established a reserve fund for replacement.
Generally, a Section 223(f) insured mortgage loan cannot exceed 85% of the
USHUD-estimated value of the apartment complex, or 70% if the apartment complex
is to be refinanced without a change in ownership. The term of the mortgage loan
cannot be less than ten years nor greater than thirty-five years.
A mortgage loan insured under either Section 223(f) program contains provisions
restricting prepayment, except after a specified period or with approval of
USHUD. The mortgage may contain provisions for a prepayment charge.
87
<Page>
USHUD RENTAL ASSISTANCE PROGRAMS
(1) SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAMS. Although the Section 8
Programs applicable to new construction and substantial rehabilitation have been
repealed, Boston Capital may invest in operating partnerships which own
apartment complexes that were originally assisted under these programs. It
should be noted that the definition of "federally assisted" contained in Section
42 of the tax code does not include the Section 8 Program. Accordingly, a newly
constructed or substantially rehabilitated apartment complex receiving Section 8
subsidy assistance may be entitled to the 70% credit with respect to the entire
Qualified Basis, if newly constructed, or with respect to the rehabilitation
expenditures, if substantially rehabilitated within the meaning of Section 42 of
the tax code, if it is placed in service after acquisition by Boston Capital of
an interest in the applicable operating partnership.
(a) THE SECTION 8 NEW CONSTRUCTION AND SUBSTANTIAL REHABILITATION PROGRAMS. The
Section 8 Programs provide for monthly payments to apartment complex owners on
behalf of qualified tenants who are occupying the number of dwelling units in
the apartment complex agreed to between USHUD and the apartment complex owner as
being eligible for Section 8 payments. The Section 8 Programs do not provide
construction or permanent financing and are not mortgage insurance programs,
although apartment complexes assisted by the Section 8 Programs can be financed
by a USHUD-insured mortgage loan. See "Government Assistance Programs--USHUD
Mortgage Insurance-221(d)(4) Program." Payments to the apartment complex owner
under the Section 8 new construction or substantial rehabilitation programs are
made pursuant to the terms of a Housing Assistance Payments Contract ("HAP
Contract") for periods generally not exceeding twenty years, commencing when the
eligible dwelling units are completed, are ready for occupancy and have been
inspected by USHUD.
Generally, only very low income families are eligible to rent units assisted
with Section 8 payments. Very low income families or elderly or handicapped
persons must have annual incomes, determined pursuant to USHUD regulations, that
do not exceed 50% of the median income of the community, adjusted to reflect
family size as determined by published USHUD figures.
Tenants must, in most instances, pay rent to the apartment complex owner, plus a
USHUD-approved allowance for utilities if utilities are separately charged to
the tenants, which together equals 30% of the tenant family's annual income and
does not exceed 50% of the median income of the community, adjusted to reflect
family size as determined by published USHUD figures.
USHUD establishes a contract rent for each unit in an apartment complex which is
equal to the total rental revenue that the apartment complex
88
<Page>
owner is to receive for that unit. That part of the contract rent that is not
covered by the tenant's rent obligation is paid to the apartment complex owner
under the HAP Contract. If a tenant's annual income subsequently increases, the
portion of the rent he pays will increase and the corresponding Section 8
payments to the owner will be reduced, assuming that the contract rent of the
unit does not increase. The 1988 Tax Act allows an owner to increase the rent of
a Section 8 tenant whose income had increased in order to compensate for the
decreased Section 8 subsidy payment notwithstanding the Rent Restriction Test.
See "Government Assistance Programs--The Federal Housing Tax Credit-Qualified
Apartment Complexes." Rent subsidies, for these or any programs, may decrease or
be interrupted for the period a unit is unrented.
USHUD may cause the Section 8 payments for an apartment complex to cease if,
after due notice to the apartment complex owner and an opportunity to remedy the
situation, USHUD determines that the apartment complex owner is not providing
decent, safe and sanitary housing or is in default under any of its contractual
undertakings to USHUD.
Initially established prior to construction, contract rents normally cannot be
changed when the HAP Contract is executed. Thereafter, however, the contract
rents will be adjusted in accordance with annual adjustment factors determined
yearly by USHUD. While application of these factors can either increase or
decrease the contract rents, provided that they cannot drop below the initially
established contract rents, it is anticipated that the contract rents will be
increased each year. In addition, USHUD may permit additional adjustments to the
contract rents to reflect increases in the actual and necessary expenses of
owning and maintaining the units resulting from substantial general increases in
real property taxes, assessments, utility rates or utilities not covered by
regulated rates, if the owner can demonstrate that such general increases have
caused increases in operating costs not adequately covered by the contract rent
increase calculated by applying the annual adjustment factors. Contract rent
adjustments generally, may not result in material differences between the
contract rents and the rents for comparable unassisted units in the apartment
complex or in the community. Pursuant to the Housing and Community Development
Act of 1987 and the Stewart B. McKinney Homeless Assistance Amendments Act of
1988, USHUD may not reduce contract rents in effect on April 15, 1987, unless
the apartment complex's mortgage loan has been refinanced.
One requirement imposed by USHUD regulations on apartment complexes with HAP
Contracts effective after November 1979 is to limit the amount of the owner's
annual cash distribution from operations to 10% of the owner's equity investment
in an apartment complex if the apartment complex is intended for occupancy by
families, and to 6% of the owner's
89
<Page>
equity investment in an apartment complex intended for occupancy by elderly
persons.
The owner's equity investment in the apartment complex is 10% of the apartment
complex's replacement cost as determined by USHUD. If cash distributions in any
year are less than the established ceiling, the amount of the shortfall may be
paid out in a subsequent year without counting against that subsequent year's
established ceiling on cash distributions. The limitations on cash distributions
do not apply to non-elderly apartment complexes of fifty units or fewer, or to
apartment complexes where not more than 20% of the units are receiving Section 8
payments.
(b) THE SECTION 8 EXISTING HOUSING LEASING PROGRAM. Under the Section 8 existing
housing leasing program, operated through local housing authorities ("PHAs"),
tenants are given a housing certificate or voucher which is used to pay a
significant portion of the tenant's rent in the private market. After the tenant
obtains a certificate or voucher, the tenant is allowed to search for housing
available in the private market, subject to housing quality and suitability
standards. Although the certificate and voucher program differ in certain key
respects, they both are dependent on the availability of an adequate stock in
the existing rental market.
Pursuant to the Housing and Community Development Act of 1987 and the Stewart B.
McKinney Homeless Assistance Act of 1988, PHAs are provided authority to assign
up to 15% of the assistance which has been made available to that PHA to
particular structures for a period of five years, with options to renew for up
to an additional ten years, subject to the availability of funds for this
program.
(c) HAP CONTRACT RENEWALS. Many HAP Contracts are reaching expiration within the
next several years. No program has been established for the universal renewal of
such contracts. All project-based contracts expiring in fiscal year 1997 are
renewable for one year at current rents, up to 120% of fair market rents. USHUD
is also implementing plans for certain loans to be marked-to-market. This
entails reducing payments under a project-based HAP Contract as part of a
restructuring of the project's USHUD-insured mortgage loan.
RENT SUPPLEMENT PROGRAMS
Section 236(f)(2) of the National Housing Act, as amended, and Section 101 of
the Housing and Urban Development Act of 1965, as amended, each provide for the
making by USHUD of rent supplement payments to low income tenants in apartment
complexes which receive other forms of federal assistance, such as Section 236
interest reduction payments. The payments for each tenant, made directly to the
owner of the apartment complex, generally will be in such amounts as to enable
the tenant to pay rent equal to 30% of adjusted family income. Generally,
20%-40% of the
90
<Page>
units in an apartment complex receiving other subsidy assistance are eligible
for this additional assistance.
USHUD has converted rent supplement assistance to assistance under the Section 8
program. Such Section 8 payments generally provide higher rents to owners than
rent supplement payments, but are paid only if a tenant is occupying the unit.
TRANSFER OF PHYSICAL ASSETS PROCEDURE
Federal regulations provide that certain types of transfers of ownership in
apartment complexes that receive USHUD mortgage insurance and/or subsidies must
be approved in advance by USHUD. This transfer of physical assets process must
be pursued when there is a transfer of the partnership interests of a
partnership which affects or changes the control of the partnership. RHS also
has instituted similar approval procedures for transfers of ownership interests
in RHS-assisted apartment complexes.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION/
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Government National Mortgage Association ("GNMA"), a governmental corporation
within USHUD, was established to provide a secondary market for certain
federally assisted or subsidized mortgages.
Under the tandem programs, no longer in effect, GNMA purchased mortgages from
primary lenders at prices favorable to the lenders, and then resold those
mortgages to the Federal National Mortgage Association ("FNMA") and others at
market prices, absorbing the difference as a subsidy. Mortgage loans eligible
for purchase were insured under certain USHUD programs, including Sections 220,
221(d)(3), 221(d)(4) and 236.
STATE AND LOCAL FINANCING PROGRAMS
A number of states and some local governmental entities have established housing
finance agencies ("HFAs") to assist in the development and financing of low and
moderate income housing. While the majority of HFAs are independent public
authorities governed by an appointed board of directors or commissioners,
certain HFAs have been established as agencies or departments of the applicable
state or local government.
HFAs are empowered by their enabling legislation to issue their own
obligations--short-term notes and long-term revenue bonds--which, due to the
status of the HFAs as governmental entities, are under certain conditions exempt
from federal income taxation. These obligations are sold in the tax-exempt
municipal bond market at interest costs to the HFAs below conventional money
market rates. The HFAs then use the proceeds of the sale of their notes and/or
bonds to make or purchase
91
<Page>
mortgage loans for low and moderate-income multifamily apartment complexes.
Several HFAs provide mortgage financing for multifamily housing developments
financed with USHUD-insured mortgage loans. Generally, in cases where the
mortgage loans of HFAs also are USHUD-insured, the underwriting and regulatory
standards and procedures of USHUD pursuant to the applicable USHUD mortgage
insurance program are employed without any substantial additional requirements.
Most HFAs provide direct construction and permanent mortgage loans for
multifamily housing without USHUD mortgage insurance by self-insuring the loans.
In cases where the mortgage loans of HFAs are not USHUD-insured, the HFAs
generally undertake the processing and evaluation of the mortgage loan
application itself, review the loan application for economic feasibility, and
review the market need and demand for, and the architectural and construction
characteristics of, the multifamily apartment complex. In such cases, the HFAs
generally also monitor the construction progress, marketing, rent-up and
management of the apartment complex.
Although HFAs' criteria and requirements for non-USHUD insured direct
construction and permanent mortgage loans vary, generally such loans are
available to limited partnership private owners in an amount up to 90% of an
HFAs' estimate of the total development cost of the housing development, and are
for terms of up to forty years. The loans can finance newly constructed or
substantially rehabilitated multifamily rental housing intended for occupancy by
individuals and families, elderly individuals and handicapped individuals of low
and moderate income, and limit the amount of operating income from the apartment
complex which may be distributed to the owner annually. The HFAs' direct loan
programs frequently include requirements as to operating assurances, escrow,
working capital and other deposits which may be greater in amount and extend for
a longer period than similar requirements under USHUD mortgage insurance
programs. While certain of these operating assurances may be funded from
mortgage loan proceeds, most are to be provided by the developer/owner either in
cash, in the form of letters of credit or through the pledge of certain equity
syndication proceeds.
In addition to the limitation on cash flow distributions from apartment complex
operations noted above, HFAs' direct mortgage loan programs generally impose
limitations on the prepayment of the mortgage loan and on the sale, refinancing
or change in use of the apartment complex. They also may require that a
restrictive covenant be placed on record prohibiting the use of the apartment
complex for any purpose other than rental housing. Further, they may require
approval of the sale of certain interests in an owning limited partnership.
92
<Page>
In order to maintain the tax-exempt nature of obligations issued by HFAs, owners
must comply with restrictions in the tax code. In this respect, the 1986 Tax Act
added certain restrictions on the use of tax-exempt financing by state and local
housing financing agencies under Section 103(b) of the tax code that make this
program more restrictive. Before passage of the 1986 Tax Act, 20% of the units
were required to be rented to households with incomes at or below 80% of median
income, and there was no adjustment for the size of the family. Under the 1986
Tax Act, 20% of the units must be rented to households at 50% of median income,
or 40% of the units must be rented to households at 60% of area median
income--the same targeting as for the tax credit--and adjustment for family size
is required. In addition, the low income occupancy requirements must be met for
at least a fifteen-year period. The amount of tax-exempt bond authority
available to a state or local agency is subject to a strict state bond cap.
The tax credit may be utilized with respect to apartment complexes financed by
tax-exempt bonds issued by state or local agencies. In such cases, the credit
allocation is not subject to the state credit cap, as the bonds are subject to
the state bond allocation cap. However, apartment complexes financed through
tax-exempt bond financing are considered federally assisted, and thus are only
eligible for the 30% Credit.
HOME PROGRAM
The HOME Investment Partnership Act ("HOME") is authorized under Title II of the
Cranston-Gonzalez National Affordable Housing Act, enacted into law in 1990.
HOME is a formula-based federal housing program intended to support a wide
variety of state and local affordable housing programs, with an emphasis on
rental housing.
HOME funds, which are allocated by USHUD on a formula basis to participating
state and local governments, can be used by such governments to expand the
supply of affordable housing and increase the number of households who can be
served by assisted housing programs. Funds can be used for acquisition,
construction, moderate or substantial rehabilitation activities or for
tenant-based rental assistance programs.
State and local jurisdictions are statutorily required to meet matching
requirements in order to qualify for HOME funding. This match requirement is
currently 25%.
Participating jurisdictions are allowed to use funds for equity investments,
interest-bearing or non-interest-bearing loans, advances, interest subsidies or
other forms of assistance that USHUD finds to be consistent with the purpose of
law. Any loan to a project with an interest rate below the applicable federal
borrowing rate, would be eligible only for the 30% Credit because the project
would be considered to be federally subsidized.
93
<Page>
However, apartment complexes receiving below market interest rate loans pursuant
to the HOME program which are newly constructed or substantially rehabilitated
could be eligible for the 70% Credit. In order to qualify for this treatment,
the owner must agree that not less than 40% of the dwelling units must be
occupied by individuals whose incomes are 50% or less of the area median gross
income for the area in which the property is located; in the case of properties
in New York City, 40% is reduced to 25%. Moreover, the increase in Eligible
Basis allowed for projects situated in qualified census tracts and difficult
development areas does not apply to properties subject to this provision. This
amendment is effective for loans made after August 10, 1993.
The amount of funds which a participating jurisdiction may invest on a per-unit
basis in an apartment complex may not exceed the per-unit limits established by
USHUD under Section 221(d)(3) of the National Housing Act.
Generally, 90% of the families assisted under the HOME Program must have incomes
that do not exceed 60% area median income, with the remaining 10% having incomes
not exceeding 80% of area median income, adjusted for family size. It should be
noted that the rents allowed for such remaining units may exceed the amounts
permitted for units under the federal housing tax credit program.
MANAGEMENT
THE GENERAL PARTNER
Boston Capital Associates V L.L.C. ("Boston Associates"), the general partner of
Boston Capital Tax Credit Fund V L.P. ("Boston Capital"), is a Delaware limited
liability company, the managing member of which is John P. Manning. The
non-managing member of Boston Associates is a limited partnership whose partners
are certain officers and employees of Boston Capital and its affiliates and they
exercise no management or control over Boston Capital.
Boston Associates has a net worth of not less than $1,000,000.
Boston Associates does not have directors and officers.
Unless bankrupt or dissolved, Boston Associates may sell, transfer, or assign
its general partner interest in Boston Capital only with the prior consent of a
majority in interest of investors. Boston Associates does not intend to withdraw
from Boston Capital.
The Investment Committee of Boston Capital will have exclusive responsibility
for approving investments for each series. The Investment Committee will
initially be comprised of the persons identified below. In addition to approving
investments, the Committee will establish the terms and conditions pursuant to
which such investments will be made.
94
<Page>
The members of the Investment Committee are:
Richard J. DeAgazio, President of the Dealer-Manager and Executive Vice
President of Boston Capital Corporation; Jeffrey H. Goldstein, Chief Operating
Officer of Boston Capital Corporation; John P. Manning, President and Chief
Executive Officer, Boston Capital Corporation; Kevin P. Costello, Executive Vice
President of Boston Capital Corporation.
BOSTON CAPITAL CORPORATION AND ITS AFFILIATES
Boston Capital Corporation is a real estate investment banking firm specializing
in the equity financing of multi-family residential properties through the use
of public and private limited partnerships.
Boston Capital Corporation is the successor in interest through merger of
Greater Boston Development, Inc., which was founded in 1974 by Herbert F.
Collins and John P. Manning.
While Boston Capital is not a direct subsidiary of Boston Capital Corporation,
each of the entities is under the common control of John P. Manning. Mr. Manning
does not receive any direct compensation from the offering other than from his
role of ultimately controlling Boston Associates and its affiliates. Boston
Associates and its affiliates have not and do not intend to acquire any assets
from Mr. Manning.
Boston Capital Services, Inc., the Dealer-Manager and an affiliate of Boston
Capital Corporation was founded in 1982 by Messrs. Herbert F. Collins, John P.
Manning and Richard J. DeAgazio, who is the President of the Dealer-Manager and
an Executive Vice President of Boston Capital Corporation. The Dealer-Manager is
an SEC-registered soliciting dealer and a member of the National Association of
Securities Dealers, Inc.
Boston Capital Holdings L.P. finds, analyzes and presents potential investments
to the Investment Committee for which it receives the 8.5% Asset Acquisition
Fee. Boston Capital Holdings L.P. is owned by Boston Capital Corporation.
Boston Capital Asset Management Limited Partnership ("Boston Capital Asset
Management") either manages directly or monitors the management of the portfolio
of real estate-based assets which Boston Capital has syndicated.
Boston Capital Asset Management's management responsibilities include the
collection, analysis and distribution of pertinent information to the investors
who have invested in the Boston Capital Corporation real estate portfolio.
BCTCV Assignor Corp., as limited partner of Boston Capital, does not exercise
any management or control over Boston Capital, and does not receive any
compensation or fees from Boston Capital. Its sole purpose is to allow changes
in investors without re-executing the Fund Agreement. John P. Manning is
president and sole director of BCTCV Assignor Corp.
95
<Page>
JOHN P. MANNING, age 55, is co-founder, and since 1974 has been the President
and Chief Executive Officer of Boston Capital Corporation, where he is primarily
responsible for strategic planning, business development and implementation of
corporate growth strategies. In addition to his responsibilities at Boston
Capital Corporation, Mr. Manning is a proactive leader in the industry. He
served in 1990 as a member of the Mitchell-Danforth Task Force, which reviewed
and suggested reforms to the Low Income Housing Tax Credit program. He was the
founding President of the Affordable Housing Tax Credit Coalition and is a
former member of the board of the National Leased Housing Association. During
the 1980s, he served as a member of the Massachusetts Housing Policy Committee
as an appointee of the Governor of Massachusetts. In addition, Mr. Manning has
testified before the U.S. House Ways and Means Committee and the U.S. Senate
Finance Committee on the critical role of the private sector in the success of
the Low Income Housing Tax Credit Program and in the creation of affordable
housing. In 1996, President Clinton appointed him to the President's Advisory
Committee on the Arts at the John F. Kennedy Center for the Performing Arts. In
1998, President Clinton appointed Mr. Manning to the President's Export Council
which is the premiere committee comprised of major corporate CEOs that advise
the President on matters of foreign trade and commerce. Mr. Manning sits on the
Board of Directors of the John F. Kennedy Presidential Library in Boston where
he serves as Chairman of the Distinguished Visitors Program. He also serves as a
member of the Advisory Board of the Woodrow Wilson Institute for International
Scholars in Washington D.C. In 2003, he was appointed by Mayor Menino to the
Mayors Advisory Panel on Housing. Mr. Manning is a graduate of Boston College.
Mr. Manning is the managing member of Boston Associates. Mr. Manning is also the
principal of Boston Capital Corporation. While Boston Capital is not a direct
subsidiary of Boston Capital Corporation, each of the entities is under the
common control of Mr. Manning.
RICHARD J. DeAGAZIO, age 59, has been the Executive Vice President of Boston
Capital Corporation, and President of Boston Capital Services, Inc., Boston
Capital's NASD registered broker/dealer since 1981. Mr. DeAgazio formerly served
on the national Board of Governors of the National Association of Securities
Dealers (NASD). He recently served as a member of the National Adjudicatory
Council of the NASD. He was the Vice Chairman of the NASD's District 11
Committee, and served as Chairman of the NASD's Statutory Disqualification
Subcommittee of the National Business Conduct Committee. He also served on the
NASD State Liaison Committee, the Direct Participation Program Committee and as
Chairman of the Nominating Committee. He is a past President of the Real Estate
Securities and Syndication Institute and a founder and past President of the
National Real Estate Investment Association, past President of the Real Estate
Securities
96
<Page>
and Syndication Institute (Massachusetts Chapter). Prior to joining Boston
Capital in 1981, Mr. DeAgazio was the Senior Vice President and Director of the
Brokerage Division of Dresdner Securities (USA), Inc., an international
investment banking firm owned by four major European banks, and was a Vice
President of Burgess & Leith/Advest. He has been a member of the Boston Stock
Exchange since 1967. He is on the Board of Directors of FurnitureFind.com and
Cognistar Corporation. He is a leader in the community and serves on the Board
of Trustees for Bunker Hill Community College, the Business Leaders Council of
the Boston Symphony, Board of Trustees of Junior Achievement of Northern New
England, the Board of Advisors for the Ron Burton Training Village and is on the
Board of Corporators of Northeastern University. He graduated from Northeastern
University.
JEFFREY H. GOLDSTEIN, age 42, is Chief Operating Officer and has been the
Director of Real Estate of Boston Capital Corporation since 1996. He directs
Boston Capital Corporation's comprehensive real estate services, which include
all aspects of origination, underwriting, due diligence and acquisition. As COO,
Mr. Goldstein is responsible for the financial and operational areas of Boston
Capital Corporation and assists in the design and implementation of business
development and strategic planning objectives. Mr. Goldstein previously served
as the Director of the Asset Management division as well as the head of the
dispositions and troubled assets group. Utilizing his 16 years experience in the
real estate syndication and development industry, Mr. Goldstein has been
instrumental in the diversification and expansion of Boston Capital
Corporation's businesses. Prior to joining Boston Capital Corporation in 1990,
Mr. Goldstein was Manager of Finance for A.J. Lane & Co., where he was
responsible for placing debt on all new construction projects and debt structure
for existing apartment properties. Prior to that, he served as Manager for
Homeowner Financial Services, a financial consulting firm for residential and
commercial properties, and worked as an analyst responsible for budgeting and
forecasting for the New York City Council Finance Division. He graduated from
the University of Colorado and received his MBA from Northeastern University.
KEVIN P. COSTELLO, age 57, is Executive Vice President and has been the Director
of Institutional Investing for Boston Capital Corporation since 1994. Mr.
Costello directs Boston Capital Corporation's institutional investment business.
He has overseen this segment of Boston Capital Corporation's investment business
which encompasses investment activities for corporate institutional funding,
private proprietary funds and state CRA funds, since its inception in 1992. Mr.
Costello has over 20 years experience in the real estate syndication and
investment services industry, including previous roles at Boston Capital
Corporation leading the acquisition team and managing the structuring and
distribution of conventional and tax credit private
97
<Page>
placements. Prior to joining Boston Capital Corporation in 1987, he held
positions with First Winthrop, Reynolds Securities and Bache & Company where he
focused on real estate syndication. Mr. Costello has also held senior management
positions with two major medical firms, Abbott Laboratories and Roche
Diagnostics. Mr. Costello graduated from Stonehill College and received his MBA
with honors from Rutgers' Graduate School of Business Administration.
FRANK L. CHANDLER, age 41, is Senior Vice President and National Sales Director
for Boston Capital Services, Inc., the NASD registered broker dealer. From 2002
to 2003, he was Vice President and Director of Sales for Boston Capital
Services, Inc. From 2000 to 2002, he was Assistant Vice President and Director
of Internal Sales. From 1997 to 2000 he was the Sales Desk Manager for Boston
Capital Services, Inc. He is currently in charge of the firm's sales force, key
accounts and direct sales. Prior to joining Boston Capital Services, Inc. in
1997, Mr. Chandler was the President and founder of a financial services video
marketing company. Prior to that, he was a financial executive and Vice
President at Bear Stearns & Company and a Registered Representative at both
Drexel Burnham Lambert and Smith Barney. Mr. Chandler attended Syracuse
University prior to receiving a Bachelor of Arts from Skidmore College.
EILEEN P. O'ROURKE, age 48, has been Senior Vice President and Director of
Taxation and Housing Compliance for Boston Capital Corporation since 2002. Ms.
O'Rourke has over twenty years experience in taxation and accounting. Ms.
O'Rourke served as the Director of Asset Management for Boston Capital
Corporation from 1997 to 2002. Prior to joining Boston Capital Corporation, she
was the Partnership Tax Controller at First Data Investor Services Group, Inc.
where she directed the tax compliance of real estate public partnerships and the
issuance of 200,000 investors' K-1's annually. Before that she held positions as
a Senior Tax Accountant with Culp, Elliott and Carpenter, P.C. and as a Senior
Auditor with the Internal Revenue Service. She is Co-Chair of the Housing Credit
Certified Professional Board of Governors and is a member of the American
Institute of Certified Public Accountants, Massachusetts and North Carolina
Societies of Certified Public Accountants as well as New England Women in Real
Estate. Ms. O'Rourke graduated with honors from Russell Sage College and is
licensed as a Certified Public Accountant.
DANIEL P. PETRUCCI, age 38, is a Senior Vice President and has been the Director
of Structured Finance and Portfolio Management of Boston Capital Corporation
since 1998, and is responsible for all corporate and retail fund portfolio
management. Prior to accepting his current responsibilities, he performed duties
in the areas of real estate origination, underwriting and acquisitions. Mr.
Petrucci has more than 16 years of real estate, finance and syndication
experience. Prior to joining Boston Capital Corporation in 1990,
98
<Page>
he was responsible for conducting all aspects of due diligence on commercial and
multifamily acquisition candidates for the Krupp Companies, a leading real
estate syndication, development and lending institution. He is a graduate of
Marquette University, Milwaukee, Wisconsin.
STEVEN M. SPALL, age 41, is a Senior Vice President and Director of Asset
Management. Mr. Spall joined Boston Capital Corporation in 1993 with previous
experience as an Asset Manager with the Weisberg Development Corporation in
Arlington, VA and The Grossman Companies in Quincy, MA. From 1993 to 2002 he has
worked in the Acquisitions Department and has been responsible for developing
and maintaining successful relationships with many of Boston Capital's most
important general partners. Mr. Spall assumed the role of Director of Asset
Management in 2002. He has an MBA with a concentration in Finance from Suffolk
University and a BA in Economics from the State University of New York at
Oswego.
MARC N. TEAL, age 40, was promoted to Chief Financial Officer of Boston Capital
Corporation in 2003. Mr. Teal previously served as Senior Vice President and
Director of Accounting since 2002 and prior to that served as Vice President of
Partnership Accounting. He has been with Boston Capital Corporation since 1990.
In his current role as CFOhe oversees all of the accounting, financial
reporting, SEC reporting, budgeting, audit, tax and compliance for Boston
Capital, its affiliated entities and all Boston Capital Corporation sponsored
partnerships. Additionally, he is responsible for maintaining all banking and
borrowing relationships of Boston Capital Corporation and management of all
working capital reserves. Prior to joining Boston Capital in 1990, Mr. Teal was
a Senior Accountant for Cabot, Cabot & Forbes, a multifaceted real estate
company, and prior to that was a Senior Accountant for Liberty Real Estate Corp.
He received a Bachelor of Science Accountancy from Bentley College and a Masters
in Finance from Suffolk University.
THEODORE TRIVERS, age 49, is a Senior Vice President and has been Director of
Underwriting and Due Diligence for Boston Capital Corporation since 1993. He
directs the underwriting and acquisition of properties for the Boston Capital
portfolios and serves on the Investment Committee and the Disposition Committee.
From 2002 to 2003, Mr. Trivers served as Director of Tax Credit Acquisitions. He
has 23 years experience in real estate development, construction, finance and
property management. Prior to joining Boston Capital in 1993, Mr. Trivers was
Treasurer of New England Communities, Inc., a regional real estate acquisition,
asset management and property management company located in Massachusetts. Mr.
Trivers received a Bachelor of Science degree in Business and a Master of
Business Administration from Babson College.
99
<Page>
PRIOR PERFORMANCE OF BOSTON ASSOCIATES AND ITS AFFILIATES
During the ten-year period from January 1, 1993 to December 31, 2002, affiliates
of Boston Associates and their respective predecessors in interest have served
as general partners of two public limited partnerships and thirty-seven private
limited partnerships including twenty-seven corporate limited partnerships and
ten direct placement corporate limited partnerships for a total of thirty-nine
real estate programs. The two public limited partnerships had public offerings
of 29 series, namely Series 15 through 43. All of the thirty-seven private
limited partnerships are organized in a two-tier structure. In a two-tier
structure, investors acquire an interest in a limited partnership (the "upper
tier") which in turn acquires a limited partnership interest in a limited
partnership which owns the real estate (the "lower tier"). A two-tier structure
allows an investor to indirectly own interests in more than one lower-tier
limited partnership through their investment in a single upper-tier partnership.
Affiliates of Boston Associates and their respective predecessors in interest
raised $2,424,138,943 in subscriptions from 46,812 investors during this
ten-year period. A total of 1,131 properties(1), with a total development cost
of $4,318,300,708 were acquired for the public and private limited partnerships.
These properties are geographically located 12% in the Northeast, 10% in the
Mid-Atlantic, 30% in the Southeast, 25% in the Midwest, 14% in the Southwest,
and 9% in the West.
The foregoing information covering the period from January 1, 1993 to December
31, 2002, can be summarized as follows:
<Table>
<Caption>
PROGRAMS PROPERTIES INVESTORS
- ----------------- ----------------------- -------------------------
AVERAGE
TOTAL CAPITAL
DEVELOPMENT INVESTED
TYPE NUMBER NUMBER COST NUMBER CAPITAL PER PROPERTY
---- ------ ------ ----------- ------ ------- ------------
Public 2 555 $ 1,650,741,876 46,624 $ 866,166,500 $ 1,560,660
Private 37 576 $ 2,667,558,832 188 $ 1,557,972,443 $ 2,704,813
-- ----- --------------- ------ --------------- -----------
Total 39 1,131 $ 4,318,300,708 46,812 $ 2,424,138,943 $ 2,143,359
</Table>
REGIONS
<Table>
<Caption>
NORTHEAST MID-ATLANTIC SOUTHEAST MIDWEST SOUTHWEST WEST
--------- ------------ --------- ------- --------- ----
Public 6% 5% 15% 13% 6% 4%
Private 5% 6% 15% 12% 7% 6%
-- -- -- -- --
Total 12% 10% 30% 25% 14% 9%
</Table>
100
<Page>
Of these 39 prior limited partnerships, all have invested in apartment complexes
(or operating partnerships which owned such complexes) financed and/or operated
with one or more forms of government subsidy, primarily RHS. The states in which
these apartment complexes are located and the number of properties in each state
are as follows:(2)
<Table>
Alabama 15
Arizona 8
Arkansas 18
California 54
Colorado 29
Connecticut 17
Delaware 3
District of Columbia 2
Florida 22
Georgia 60
Illinois 16
Indiana 11
Iowa 13
Kansas 19
Kentucky 52
Louisiana 102
Maine 13
Maryland 18
Massachusetts 15
Michigan 57
Minnesota 7
Mississippi 50
Missouri 47
Montana 3
Nebraska 4
Nevada 3
New Hampshire 5
New Jersey 13
New Mexico 8
New York 61
North Carolina 24
North Dakota 17
Ohio 7
Oklahoma 29
Oregon 1
Pennsylvania 17
Puerto Rico 4
Rhode Island 2
South Carolina 12
South Dakota 2
Tennessee 15
Texas 86
Utah 4
Vermont 4
Virginia 46
Virgin Islands 11
Washington 3
West Virginia 6
Wisconsin 11
Wyoming 0
</Table>
- ----------
(1) Includes seventy-eight properties which are jointly owned by two or more
investment partnerships or series within an investment partnership which
represent a total of seventy-nine shared investments.
(2) The total number of properties by state does not reflect the eighty-five
shared investments of seventy-eight operating partnerships. The net number
of properties reflected is 1,046.
The thirty-nine government-assisted partnerships which invested in residential
apartment complexes accounted for 100% of the total development cost of all
properties acquired by all limited partnerships sponsored over the ten-year
period.
Of the total offerings during the ten-year period, thirty-nine invested in
government-assisted properties and had investment objectives which were similar
to the investment objectives of Boston Capital, to the extent that the limited
partnerships intended to provide, in order of priority; (1) certain tax benefits
in the form of tax losses or low-income housing and rehabilitation tax credits
which each such limited partnership's partners might use to offset income from
other sources; (2) long-term capital appreciation through increases in the value
of each apartment complex and (3) cash distributions through potential sale or
refinancing transactions. Distributions of current cash flow were not a primary
objective of these partnerships, in that the government agencies which provide
subsidies regulate both the amount of rent and the amount of cash distributions
which may be made to partners.
101
<Page>
No apartment complexes have been sold to date from any of Boston Capital's prior
series.
Information concerning the public limited partnerships organized between January
1, 2000 and December 31, 2002 is contained in Appendix I-Tabular Information
Concerning Prior Limited Partnerships.
PRIVATE PLACEMENTS
(WITH SIMILAR INVESTMENT OBJECTIVES)
During the ten-year period ending December 31, 2002, interests in thirty-seven
of the limited partnerships with similar investment objectives were sold to
approximately 188 investors in private offerings intended to be exempt from the
registration requirements of the Securities Act of 1933. A total of
$1,557,972,443 in subscriptions was raised. Interests were acquired in a total
of 576 properties, with a total development cost of $2,667,558,832.
The private limited partnerships involved new construction or renovation of
apartment complexes, financed with mortgage indebtedness aggregating
approximately $1,430,564,793 in addition to the equity investment of the prior
limited partnerships of $1,557,972,443. The purchased properties equalled 100%
of the total development cost of all non-commercial and non-conventional
properties invested in by private limited partnerships.
PUBLIC OFFERINGS
During the ten-year period ending December 31, 2002, interests in 29 series with
investment objectives similar to those of Boston Capital, were sold to
approximately 46,624 investors in public offerings registered under the
Securities Act of 1933. A total of $866,166,500 in subscriptions was raised. A
total of 555 properties were purchased at a total development cost of
$1,650,741,876.
Information regarding the public offerings is summarized as follows as of
September 30, 2003:
<Table>
<Caption>
INVESTORS PROPERTIES TYPE OF PROPERTIES
-----------------------------------------------------------------------------------------------
TOTAL
DEVELOP- RECENTLY UNDER HISTORIC
MENT COMP- CON- TAX
PROGRAM CLOSED NUMBER CAPITAL NUMBER COST LETED STRUCTION CREDIT
- -------------------------------------------------------------------------------------------------------------------
Boston
Capital Tax
Credit
Fund III L.P.
(Series 17
through 19). 1993 7,476 $ 126,962,000 109 $ 290,143,950 101 N/A 8
Boston
Capital Tax
Credit
Fund IV L.P.
(Series 20
through 45). 42,287 $ 806,367,900 484 $ 1,480,440,444 445 39 4
</Table>
A total of 41.88% of the properties listed in the chart above received
additional federal subsidies and, thus, the 30% tax credit; the remaining
102
<Page>
percentage did not receive additional federal subsidies, but received the 70%
tax credit. See "Tax Credit Programs--Summary of the Tax Credit Program" for
information regarding the two different kinds of tax credits.
The foregoing prior performance information does not include Series 46 because
Series 46 closed in December 2003, having raised $29,800,000 from 1,325
investors. At that time, Series 46 had invested in 16 apartment complexes, 9
located in the Midwest region, 2 in the Southeast and 1 in the Northeast, and
4 in the Southwest, for a total development cost of $44,452,526. Series 46
has not experienced any adverse business developments or conditions.
During the four-year period ending December 31, 2002, affiliates of Boston
Associates sponsored one public investment limited partnership offering
consisting of 10 different series with similar investment objectives. This
public limited partnership owns interests in 116 operating partnerships which
include eleven properties jointly owned by two or more investment partnerships
or series within an investment partnership, representing a total of eleven
shared investments. The total number of properties by state does not duplicate
the eleven shared investments. The net number of properties reflected is 105
located in:
<Table>
Alabama 0
Arizona 1
Arkansas 1
California 2
Colorado 12
Connecticut 1
Florida 0
Georgia 5
Illinois 5
Indiana 2
Iowa 0
Kansas 5
Kentucky 10
Louisiana 12
Maine 1
Maryland 1
Massachusetts 1
Michigan 11
Minnesota 0
Mississippi 1
Missouri 3
Montana 0
Nebraska 0
Nevada 0
New Hampshire 2
New Jersey 0
New Mexico 1
New York 6
North Carolina 0
North Dakota 0
Ohio 0
Oklahoma 3
Oregon 1
Pennsylvania 0
Puerto Rico 0
Rhode Island 0
South Carolina 0
South Dakota 1
Tennessee 1
Texas 8
Utah 0
Vermont 0
Virginia 1
Virgin Islands 2
Washington 1
West Virginia 2
Wisconsin 2
</Table>
All of the operating partnership acquisitions of the public limited partnership
involved new construction or renovation of existing apartment complexes,
financed with government-assisted mortgage indebtedness aggregating
approximately $165,621,018 in addition to the equity investment of the investing
partnerships of $246,558,000. These properties equalled 100% of the total
development cost of properties acquired by public limited partnerships in the
four-year period ended December 31, 2002.
During the three-year period ending December 31, 2002, prior series acquired
interests in properties as summarized below. ALL OF THESE PROPERTIES ARE FROM
PRIOR SERIES AND AN INVESTOR IN SERIES 47 OR SERIES 48
103
<Page>
WILL HAVE NO INTEREST IN ANY OF THESE PROPERTIES. All of the properties
listed below are tax credit apartment complexes which have been financed with
a combination of mortgage indebtedness and tax credit equity.
<Table>
<Caption>
NUMBER OF PROPERTIES REGION
-------------------- ------------
9 Northeast
5 Mid-Atlantic
15 Southeast
35 Midwest
8 Southwest
15 West
</Table>
During the period January 1, 1988 through December 31, 2002, four public
partnerships sponsored by affiliates of Boston Associates have received tax
credits. Table III-A in Appendix I shows the tax credits received on a yearly
and cumulative basis for each series as a percentage of capital invested by the
investor, and compares the actual tax credits received to the overall tax credit
objective for each series. Some series have not yet reached their overall tax
credit objective, and some series have already surpassed their overall tax
credit objective. Of the series no longer generating tax credits, only one
series has failed to meet its overall tax credit objective and it failed to meet
its objective by less than 1%.
Currently, of the 555 tax credit properties invested in by the four public funds
sponsored by affiliates of Boston Associates, only 5 properties have been
subject to tax credit recapture. In 1989, Series 1 and Series 4 jointly invested
in a property called Unity Park which defaulted on its mortgage loan due to poor
market conditions. The property was transferred to the mortgage lender in lieu
of foreclosure. In 2000, the amount of tax credit recaptured on an aggregate
basis was $0.51 per certificate for Series 1 and $0.54 per certificate for
Series 4. Both Series 1 and Series 4 have achieved their respective overall tax
credit objectives. In 1991, Series 5 and 14 jointly invested in a property
called Glenhaven Park which defaulted on its mortgage loan due to poor market
conditions. A portion of the property was transferred to the mortgage lender in
lieu of foreclosure. In 2002, the amount of tax credits recaptured on an
aggregate basis was $0.14 per certificate for Series 5 and $0.003 per
certificate for Series 14. Both Series 5 and 14 have achieved their respective
overall tax credit objectives. In 1990, Series 7 and 9 jointly invested in a
property called New Holland which defaulted on its mortgage loan due to poor
market conditions. The property was transferred to the designee of the mortgage
lender in lieu of foreclosure. In 1999, the amount of tax credits recaptured on
an aggregate basis was $0.38 per certificate for Series 7 and $0.08 per
certificate for Series 9. Both Series 7 and 9 have achieved their respective
overall tax credit objectives. In 1990, Series 10 invested in a property called
46 North Connecticut which defaulted on its mortgage loan due to poor market
conditions. The property was transferred to the mortgage lender in lieu of
foreclosure. In 1999, the amount of tax credits recaptured on an aggregate basis
was $0.09 per certificate for Series 10. Series 10 has achieved its overall tax
credit objectives. Lastly, in 1989 Series 3 invested in a property called
Rainbow Housing that had some units
104
<Page>
which failed to comply with certain tax credit requirements. In 1999, the
amount of tax credits recaptured on an aggregate basis was $0.09 per
certificate. Series 3 has achieved its overall tax credit objectives.
Upon request, the most recent Form 10-K and Form 10-Q filed with the Securities
and Exchange Commission relative to the public offerings will be provided to
investors at no charge and the exhibits to each such Form 10-K and Form 10-Q
will be provided for a reasonable fee. Table VI, included as an exhibit to the
Registration Statement of which this Prospectus forms a part, presents a more
detailed description of certain of these properties. Boston Associates will
provide Table VI to any prospective investor without fee upon request. Any
investor or prospective investor may obtain a copy of the most recent Form 10-K,
Form 10-Q or Table VI upon written request to Boston Capital Tax Credit Fund V
L.P. c/o Boston Capital Corporation, One Boston Place, Suite 2100, Boston, MA
02108-4406, Attn: Richard J. DeAgazio.
* * * * *
Since the inception of Boston Capital's predecessor in interest, affiliates of
Boston Associates and their respective predecessors in interest have raised
approximately $3.0 billion in real estate equity from approximately 80,000
investors to acquire interests in approximately 2,350 properties containing
approximately 112,000 apartment units and 90 commercial buildings in 48 states,
Puerto Rico, the Virgin Islands and Washington, D.C., representing more than
$8.47 billion in total development and acquisition costs.
SEE "TABULAR INFORMATION CONCERNING CERTAIN PRIOR LIMITED PARTNERSHIPS,"
APPENDIX I, FOR DETAILED INFORMATION CONCERNING THE ABOVE LIMITED PARTNERSHIPS.
THE INFORMATION SUMMARIZED IN THESE TABLES IS NOT NECESSARILY INDICATIVE OF THE
RESULTS THAT BOSTON CAPITAL MAY EXPERIENCE. IT SHOULD NOT BE ASSUMED THAT
INVESTORS WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY
INVESTORS IN PRIOR PARTNERSHIPS. THE OPERATING HISTORY OF MANY OF THESE PRIOR
PARTNERSHIPS IS BRIEF, AND TAX RETURNS AND FINANCIAL STATEMENTS FROM ONLY THE
INITIAL YEARS OF SOME OF THESE LIMITED PARTNERSHIPS HAVE BEEN FILED.
DESCRIPTION OF CERTIFICATES
THE CERTIFICATES
Investors will invest in certificates, representing assignments of units of the
beneficial interest of Boston Capital issued to BCTC V Assignor Corp., a
Delaware corporation (the "Assignor Limited Partner"). The Assignor Limited
Partner was formed for the purpose of serving in that capacity for Boston
Capital and will not engage in any other business. Investors will be entitled to
all the rights and economic benefits of a limited partner of Boston Capital,
including the rights to a percentage of Boston Capital's income, gain, credits,
losses, deductions and distributions. No investor will be personally liable for
the debts, liabilities, contracts or other obligations of Boston Capital. See
"Summary of the Voting Rights Provisions of the Fund Agreement-Liability of
Partners and Investors to Third Parties." Investors will be bound
by the terms of the
105
<Page>
Fund Agreement of Limited Partnership. The Assignor Limited Partner agrees
that on any matter calling for a vote of the limited partners, it will vote
the assigned limited partnership interests only if and as directed by the
investors.
Under the Fund Agreement, all of the ownership attributes of limited partnership
interests held by the Assignor Limited Partner are assigned to investors,
including the right to receive a percentage of Boston Capital's income, gain,
credits, losses, deductions, and distributions, as well as the right to take
certain actions without the approval of Boston Associates and the right to
inspect Boston Capital's books and records. All rights accorded limited partners
under the laws of the State of Delaware extend to the investors under the terms
of the Fund Agreement subject to the limitations set forth under "Fiduciary
Responsibility of Boston Associates." Investors of different series will
participate in different pools of operating partnership interests. The rights
and ownership attributes of investors in all series will be identical in all
other respects, except with respect to voting rights and accounting matters
applicable to any particular series.
TRANSFERS
We anticipate the certificates of each series to be transferable, subject to
some restrictions, thirty days after the issuance of the final certificates with
respect to the applicable series. To the extent that transfers are permitted,
transferees of certificates will be recognized as investors on the first
business day of the calendar month after which Boston Capital or its agent
receives all necessary documentation with respect to the transfer.
Although we anticipate certificates to be issued in a form facilitating trading,
there are currently limitations on the transferability of certificates
necessitated by the tax credit recapture provisions in the tax code. See
"Federal Income Tax Matters--Federal Housing Tax Credit." The certificates of
all series may be listed on a national securities exchange or included for
quotation on NASDAQ only if deemed by Boston Associates to be in the best
interest of Boston Capital and the investors, which is not currently
anticipated.
If, however, prior to permitting the free transferability of certificates, our
interpretations of the tax code would indicate that free transferability would
cause Boston Capital to be treated as a corporation for federal income tax
purposes, transferability of certificates will be restricted. Even if
certificates are made freely transferable, in order to avoid recapture of tax
credits upon the transfer of certificates, no more than 50% of the certificates
will be permitted to be transferred in any twelve-month period.
No certificates will be listed for trading until Counsel renders its opinion
that it is substantially more likely than not that such listing will not cause
Boston Capital to be treated as a corporation for federal income tax purposes.
106
<Page>
Should listing occur, Boston Associates has the authority to make cash and
property distributions and adjust capital accounts in order to permit
certificates to be economically equal for purposes of public trading.
Furthermore, there is no assurance that exchange listing or inclusion on NASDAQ
will be accomplished or will be deemed by Boston Associates to be in the best
interest of Boston Capital or the investors. Accordingly, there is no assurance
that the certificates will be freely transferable. Furthermore, even if trading
is not restricted, there is no assurance that a public trading market will
develop. See "Risk Factors--Transferability" and "--Certain Federal Income Tax
Risks--Tax Treatment of Publicly Traded Partnerships."
To the extent that transfers of certificates are otherwise permitted, neither a
transfer nor an assignment of certificates will be permitted if such transfer or
assignment would be in violation of any applicable federal or state securities
laws, including investor suitability requirements. We do not anticipate that the
suitability requirements will be applicable in the event that the certificates
are listed on a national securities exchange. Boston Associates will be required
to determine that transferees meet the then-applicable investor suitability
standards prior to permitting a transfer of certificates.
Boston Associates will stop or defer a transfer or assignment of certificates if
it could result in the transfer of 50% or more of all limited partnership
interests in Boston Capital within a twelve-month period, and Boston Associates
believes that the resulting termination of Boston Capital for tax purposes would
result in recapture of tax credits by some investors or would otherwise
adversely affect the economic interests of the investors. In the event of a
suspension, Boston Associates will notify the transferring or assigning investor
and any deferred transfers or assignments will be effected, in chronological
order to the extent practicable, as of the first day of the next succeeding
period in which such transfers or assignments can be effected without either
premature termination of Boston Capital for tax purposes or any adverse effects
from such premature termination, as the case may be. In the event transfers or
assignments are suspended for the foregoing reasons, Boston Associates will give
notice of the suspension to investors as soon as practicable.
In its sole discretion, Boston Associates may at any time:
(1) halt trading in certificates;
(2) fail to list and/or cause the delisting of certificates from public trading
markets;
(3) cause each purchaser of certificates to be admitted to Boston Capital as a
beneficiary;
(4) require the investors to become limited partners (at no cost to investors);
107
<Page>
(5) restrict the circumstances under which certificates may be transferred;
(6) take such other action as it may deem necessary or appropriate, including
making any amendments to the Fund Agreement, in order to preserve the tax
status of Boston Capital as a partnership, prevent Boston Capital's
termination for federal income tax purposes, prevent the recapture of tax
credits, prevent federal income tax treatment of Boston Capital as an
association taxable as a corporation, insure that investors will be treated
as limited partners of Boston Capital for federal income tax purposes or
qualify Boston Capital as a pass-through entity.
Investors who wish to exchange their certificates for limited partnership
interests may do so after the termination of the applicable series offering
period by (1) delivering such documents as may be required by Boston Associates;
and (2) paying Boston Capital's expenses in accomplishing such exchange,
currently estimated to be $500. Such exchange will not be effective until Boston
Associates consents, which consent cannot be unreasonably withheld or delayed. A
holder of limited partnership interests may not reconvert his limited
partnership interests into certificates. Limited partnership interests will not
be transferable except by operation of law or with the consent of Boston
Associates, which may be withheld in its sole discretion. The limited
partnership interests are not liquid and will not be listed on any national
securities exchange and it is not anticipated that any trading market will exist
for such limited partnership interests. Conversions of certificates into limited
partnership interests shall be accomplished at such times as Boston Associates
shall determine, but not less frequently than semiannually.
SHARING ARRANGEMENTS: PROFITS, CREDITS, LOSSES, NET CASH
FLOW AND RESIDUALS
Profits and losses are not the same as cash distributions. Profits and losses
are determined for federal income tax purposes and include certain non-cash
deductions allowable for federal income tax purposes such as depreciation.
Accordingly, the Fund Agreement provides separately for allocations of profits
and losses, net cash flow from operations, and sale or refinancing proceeds.
Allocations of profits, credits and losses and distributions of cash will be
made on two separate levels. First, operating partnership allocations and
distributions will be made between the applicable operating general partners and
Boston Capital. Second, these allocations and distributions to Boston Capital
will be further allocated and distributed by Boston Capital between Boston
Associates and the investors.
The following discussion summarizes the provisions in the Fund Agreement and the
expected provisions of the Operating Partnership Agreements for the allocations
of profits, credits and losses and for the distribution of net cash flow, and
liquidation, sale and refinancing proceeds.
108
<Page>
Investors' capital accounts will be reduced by all distributions made to
them by Boston Capital. Accordingly, in order to assure proper treatment of
the capital accounts, the capital account of each investor will be increased
by the amount of all profits of Boston Capital, and will be reduced by the
amount of all losses and certain credits of Boston Capital, in each case to
the extent allocated to such investor.
Boston Capital will make the following allocations and distributions separately
for each series of certificates:
FROM BOSTON CAPITAL TO THE INVESTORS
1. ANNUAL CASH PAYMENTS AND DISTRIBUTIONS FROM NORMAL OPERATIONS. Boston Capital
will allocate or distribute to investors 99.75% of its net cash flow after it
pays expenses, if any, to Boston Associates and its affiliates. These expenses
include preparing tax returns, acquiring the property and paying the Fund
Management Fee. Boston Associates will receive 0.25% of net cash flow after
expenses are paid; provided, however, that investors have already received
enough to meet the priority return. Before investors do receive the priority
return, Boston Associates will receive some fees and compensation for services.
We do not anticipate that any significant amount of net cash flow will be
distributed to the investors on an annual basis.
2. PROFITS, CREDITS AND LOSSES. Boston Capital will allocate or distribute to
investors 99.75% of its profits, credits and losses from normal operations.
Gains and losses recognized by Boston Capital upon the sale, exchange or other
disposition of all or substantially all of the property owned by an operating
partnership or Boston Capital's interest in an operating partnership shall be
allocated in the order as follows:
(1) gain will be allocated to the partners and investors and Boston Associates
in the amount of their negative capital accounts;
(2) gain will be allocated to the investors in amounts equal to any unreturned
capital contributions;
(3) gain will be allocated 99.75% to the investors and 0.25% to Boston
Associates.
Any losses will be allocated first to reduce any partners' or investors'
positive capital accounts in proportion to their interest in Boston Capital;
second in the amount of any unreturned capital contributions; and third, either
to any partners who bear(s) the economic risk of any remaining losses, if any,
or all in accordance with Boston Capital interests.
3. DISTRIBUTIONS OF LIQUIDATION, SALE OR REFINANCING PROCEEDS. If there is a
sale or refinancing of an apartment complex or the sale of Boston
109
<Page>
Capital's interest in an operating partnership, Boston Capital will use the
proceeds in the following order:
(1) pay all of its third party debts and liabilities;
(2) establish any necessary reserves;
(3) repay any loans to Boston Associates or its affiliates;
(4) distribute any unreturned capital contributions to the partners and
investors;
(5) distribute 95% of the proceeds to investors and 5% to Boston Associates;
provided that Boston Associates' distribution will be subordinated to the
achievement of the priority return to investors.
Before investors do receive the priority return, Boston Associates will receive
some fees and compensation for services.
FROM THE OPERATING PARTNERSHIPS TO BOSTON CAPITAL
1. ANNUAL CASH PAYMENTS AND DISTRIBUTIONS FROM OPERATIONS. We anticipate to make
payments and distributions annually from the net cash flow of each operating
partnership as follows, if and to the extent available and subject to the
restrictions which may be imposed by the permanent mortgage loan documents and
by a Regulatory Agreement. After the payment of the reporting fee, repayment of
any subordinated loans and payment of any operating partnership management fees,
the balance will be distributed to the partners in accordance with their
interests in the operating partnership, anticipated to be from 10% to 99.99% to
Boston Capital.
Boston Capital's actual percentage share of net cash flow, as well as sale or
refinancing proceeds, is determined during negotiations with each operating
general partner. Subject to the tax code's requirement that Boston Capital
receive at least 10% of the distributions available in net cash flow and sale or
refinancing proceeds, Boston Capital can share distributions in such a manner as
to achieve desired economic outcomes. For example, in markets where the
operating general partner has more financial leverage, it may obtain a higher
share of distributions. Boston Capital evaluates these sharing arrangements with
an overall objective to maximize the investors' returns.
We do not anticipate that any significant amount of cash distributions will be
made to us on an annual basis.
2. PROFITS, CREDITS AND LOSSES. The profits, credits and losses from normal
operations are anticipated to be allocated 90%-99.99% to Boston Capital and
..01%-10% to the operating general partner(s).
Gains and losses recognized by the operating partnership upon the sale, exchange
or other disposition of all or substantially all of its property are anticipated
to be allocated in the order as follows:
(1) gain will be allocated to the partners in the amount of their negative
capital accounts;
110
<Page>
(2) gain will be allocated to the partners in amounts equal to their unreturned
capital contributions;
(3) gain will be allocated in accordance with the provisions of each Operating
Partnership Agreement, which is anticipated to result in an allocation to
Boston Capital of between 10% and 99.99%.
Any losses will be allocated first to reduce any partners' positive capital
accounts in proportion to their interests in the operating partnership, second
in the amount of any unreturned capital contributions, and third, either to any
partners who bear the economic risk of such losses, if any, or all in accordance
with the partners' interests in the operating partnership.
3. DISTRIBUTIONS OF LIQUIDATION, SALE OR REFINANCING PROCEEDS.
Liquidation, sale or refinancing proceeds realized by any operating
partnership on the sale of the applicable apartment complex or the
refinancing of the applicable permanent mortgage loan are anticipated to be
applied and/or distributed in the order as follows:
(1) payment of all third-party debts and liabilities of the operating
partnership will be paid;
(2) establishment of any necessary reserves;
(3) payment of any unpaid debts and liabilities owed to the partners of the
operating partnership of any affiliates, including payment of any Sales
Preparation Fee and repayment of any loans, excluding any working capital
loans attributable to operating partnerships with RHS financing;
(4) in some circumstances, distribution of any unreturned capital contributions
to the partners, with a minimum of 5% of any proceeds going to the
operating general partner(s) in operating partnerships receiving RHS
financing;
(5) distribution of the remainder, if any, in accordance with the terms of the
Operating Partnership Agreement, between 10% and 99.99% anticipated to go
to Boston Capital.
There can be no assurance that there will be any liquidation, sale or
refinancing proceeds with respect to any apartment complex available for
distribution to the partnership.
AUTHORITY OF THE BOSTON ASSOCIATES TO VARY ALLOCATIONS TO PRESERVE AND PROTECT
PARTNERS' AND INVESTORS' INTENT
In order to preserve and protect the determinations and allocations provided for
in the Fund Agreement, Boston Associates is authorized and directed to allocate
income, gain, loss, deduction, or credit arising in any year differently from
otherwise provided for in the Fund Agreement to
111
<Page>
the extent that allocating income, such items in the manner provided for in the
Fund Agreement, in the judgment of the tax advisors to Boston Capital, would
cause the determinations and allocations of each partner's and investors'
distributive share of such items not to be permitted by Section 704(b) of the
tax code and its Treasury Regulations. No amendment of the Fund Agreement or
approval of any partner or investor shall be required in connection with any
such new allocation. See "Federal Income Tax Matters--Fund Allocations and
Distributions."
An operating general partner of each operating partnership will have authority
identical to that described above.
ALLOCATIONS OF PROFITS, CREDITS AND LOSSES AND CASH DISTRIBUTIONS PENDING FINAL
ISSUANCE OF CERTIFICATES
In the event that there is more than one date of issuance of certificates (an
"investment date"), any cash available for distribution, and all profits,
credits and losses allocable to the investors as a class for the period
commencing with the first day following the previous investment date and ending
on the last day preceding the next succeeding investment date shall be
distributed or allocated solely to those persons who held certificates as of or
prior to the investment date occurring within such period, on the basis of an
interim closing of Boston Capital's books on such dates.
Profits, credits and losses will be allocated each month to the holder of record
of a certificate as of the last day of such month. Allocation of profits,
credits and losses among investors will be made in proportion to the number of
certificates held by each investor.
Any distributions of net cash flow or liquidation, sale or refinancing proceeds
will be made within 180 days of the end of the annual period to which they
relate. Distributions will be made to the holders of record of a certificate as
of the last day of each month in the ratio which the certificates held by such
person on the last day of the calendar month bears to the aggregate number of
certificates outstanding on the last day of the month.
FEDERAL INCOME TAX MATTERS
GENERAL CONSIDERATIONS
The following discussion is solely a discussion of the material federal tax
aspects of an investment in certificates by an investor, and is not a
comprehensive treatment of all tax considerations affecting an investment in
Boston Capital. In addition, although this discussion addresses issues with
respect to which Boston Capital has obtained, and expects to obtain in
connection with each investment date, an opinion of Counsel, it also discusses
certain matters for information purposes only and other matters with respect to
which Counsel does not or cannot opine. Boston Capital does not anticipate
requesting a ruling from the IRS confirming any opinion of Counsel or with
112
<Page>
respect to any aspect of this offering, and Counsel's opinion is not binding on
the IRS or on any court.
The following statements, together with the opinions of Counsel referred to
below, are based upon the provisions of the tax code, existing and proposed
regulations thereunder, current administrative rulings, and court decisions.
However, no assurance can be given that legislative or administrative changes or
future court decisions may not significantly modify the statements or opinions
expressed here. Any changes may or may not be retroactive with respect to
transactions prior to the effective date of the changes. In particular, as a
result of the 1986 Tax Act, which significantly revised federal income tax law,
the Treasury Department has been given broad authority to promulgate regulations
implementing the provisions of the tax code and subsequent amendments thereof.
Although Boston Capital will be guided by competent tax advisors, uncertainty
exists concerning certain tax aspects of the transactions being undertaken by
Boston Capital. The IRS has announced, and is implementing, policies and
procedures for the audit of tax shelter programs pursuant to which there is a
significant possibility that partnerships such as Boston Capital and/or the
operating partnerships, will be audited. Some of the tax positions being taken
by Boston Capital and/or the operating partnerships may be challenged by the
IRS, and there is no assurance that any challenge will not be successful. Thus,
there can be no assurance that all of the anticipated tax benefits of a purchase
of certificates will be realized.
Counsel's overall evaluation regarding the availability to an investor of the
material tax benefits from an investment in Boston Capital, in the aggregate,
begins on page 157.
The tax consequences of an investment in certificates will depend upon an
investor's own personal tax and financial situation; therefore, each investor is
urged to consult his own tax advisor with respect to the federal and state tax
consequences arising from the purchase of certificates.
BRIEF OVERVIEW OF FEDERAL INCOME TAX CONSIDERATIONS
This section briefly summarizes certain of the federal income tax considerations
associated with an investment in Boston Capital. Investors should read the
sections that follow this "Brief Overview of Federal Income Tax Considerations"
for a more detailed discussion of these federal income tax considerations.
OPINIONS OF COUNSEL. Many tax issues involve rapidly evolving areas of the law
and are not free from doubt. In addition, many tax issues involve factual issues
that will depend on the individual circumstances present at the time an event
occurs and therefore cannot be opined upon at this time. See "Opinions of
Counsel" below for a more complete discussion of these issues.
113
<Page>
CLASSIFICATION AS A PARTNERSHIP. The ability of Boston Capital and the operating
partnerships to pass through all income, credits, losses and deductions to the
investors is dependent upon their classification as partnerships for tax
purposes. Boston Capital does not plan to apply for a ruling from the IRS as to
its status or the status of the operating partnerships as partnerships for
federal income tax purposes, although Boston Capital will receive an opinion
from Counsel that Boston Capital will be treated as a partnership and not as an
association taxable as a corporation for federal income tax purposes. Prior to
investing in any operating partnership, Boston Capital will obtain an opinion of
Counsel that the operating partnership will be classified as a partnership for
tax purposes. However, these opinions are based on various assumptions and
representations and will not be binding on the IRS or the courts. If Boston
Capital were determined to be a corporation for tax purposes, Boston Capital
would be taxed on its earnings at corporate rates and any distributions to the
investors would be treated as corporate distributions, which would be taxable as
dividends to the extent of the earnings and profits of Boston Capital, and most
importantly, the tax credits could not be passed through at that level. If the
operating partnerships are treated as corporations for federal income tax
purposes, similar consequences would follow on the operating partnership level.
See "Classification as a Partnership" below for a more complete discussion of
these items.
INVESTMENTS IN OPERATING PARTNERSHIPS. The availability to prospective investors
of the tax benefits that are anticipated to be derived from a purchase of
certificates is dependent, in the first instance, on the following general
principles of partnership taxation:
1. Each of the operating partnerships must be classified as a partnership for
federal income tax purposes.
2. The allocation of the items of income, gain, tax credits, loss and deduction
to Boston Capital by each operating partnership must have substantial
economic effect or otherwise be in accordance with Boston Capital's interest
in such operating partnership.
3. Boston Capital's tax basis in each of the operating partnerships must exceed
the amount of losses allocated and cash distributed to Boston Capital from
that operating partnership.
4. Boston Capital's amount at-risk in each of the operating partnerships must
exceed the amount of losses allocated and cash distributed to Boston Capital
from that operating partnership.
5. Boston Capital's amount at-risk with respect to expenditures of each
operating partnership that qualify for tax credits must equal or exceed the
amount of those expenditures allocated to Boston Capital. See "Classification
as a Partnership," "Calculation of Investor's Basis in the Certificates,"
114
<Page>
"Allocation of Profits, Credits, Losses and Other Items in Accordance with
the Fund Agreements," and "At-Risk Limitation on Credits and Losses" below
for a more complete discussion of these issues.
TAX TREATMENT OF ELECTING LARGE PARTNERSHIPS. The 1997 Taxpayer Relief Act made
certain changes in the reporting requirements of partnerships with more than 100
partners which elect to be "large partnerships."
For example, limitations have been placed on miscellaneous itemized deductions
which may be taken. The 1997 Taxpayer Relief Act provides that 70% of
miscellaneous itemized deductions are disallowed at the partnership level,
thereby reducing the benefit of those deductions. Boston Capital does not
presently intend to elect to be a "large partnership" subject to these new
requirements.
LIMITATIONS ON USE OF CREDITS AND LOSSES. Several rules exist that may limit the
ability of an investor to deduct his or her share of Boston Capital's deductions
and losses and use Boston Capital's tax credits. These limitations are:
(a) Passive Activity Loss and Credit Limitation. The tax code divides income and
losses into three categories-active, passive, and portfolio, and divides tax
credits into two categories--active and passive. Except to the extent of the
exception described below, passive losses and credits can be applied to offset a
taxpayer's tax liability attributed to passive income, but cannot be used to
offset other types of income. These passive loss and credit limitations apply to
taxpayers who are individuals, personal service corporations, estates and
trusts. Regular "C" corporations which are not personal service corporations are
not subject to these rules, although closely held corporations--defined as a
corporation in which 50% or more of the stock is held, directly or indirectly,
by five or fewer individuals--may use passive losses and credits to offset
active trade or business income and tax liability resulting therefrom, but may
not use passive losses and tax credits to offset portfolio income or tax
liability resulting therefrom.
There is an exception to these passive activity rules which provides that tax
credits will be eligible to offset the amount of tax liability attributable to
up to $25,000 of non-passive income if the taxpayer is an individual, subject to
certain specific additional limitations, relating to the alternative minimum tax
and the rules governing general business credits. For example, this $25,000
allowance permits the use of $8,750, $8,250, or $7,000 of tax credits per year
for individuals with at least $25,000 of income in the 35%, 33% or 28% marginal
tax bracket, respectively. Taxpayers with income subject to tax at lower rates
can use lesser amounts of tax credits in each case subject to the specific
additional limitations referred to above. For example, an individual taxpayer
with a full $25,000 of income in the 25% marginal tax bracket could use $6,250
of tax credits per year, and an individual taxpayer with $25,000 of income
taxable at the minimum 15% rate would be able to use $3,750 of tax
115
<Page>
credits to offset that tax liability assuming he meets the other suitability
requirements. See "Federal Income Tax Matters--Tax Rates."
Boston Capital is expected to be treated as a passive activity and therefore,
the profits and losses (other than the portfolio income) and tax credits will be
treated as derived from a passive activity. Counsel has rendered no opinion
regarding the manner in which the limitations on losses and credits from passive
activities will apply to any particular investor, because these limitations are
applied to the particular investor rather than at the Boston Capital level and
will depend on the particular circumstances of each investor. Each investor is
strongly advised to consult his or her own tax advisor regarding the effect on
such investor of the limitation on the allowance of passive losses and credits.
See "Passive Loss and Tax Credit Limitations" below for a more complete
discussion of these issues.
(b) Basis Limitation. For each year, an investor may only take deductions and
losses from his or her taxable income to the extent those deductions and losses
do not exceed that investor's basis in his or her certificates at the end of the
year. An investor's tax basis for his or her certificates generally will be
equal to the capital contribution made plus his or her share of Boston Capital's
nonrecourse liabilities to the extent that they do not exceed the fair market
value of the assets subject thereto. Each year, such tax basis will be increased
by the amount of profits allocated, and decreased by the amount of losses
allocated, to the investor, and decreased by the amount of cash distributed to
him or her. In addition, increases or decreases in an investor's share of
nonrecourse debt will result in corresponding increases or decreases in the
investor's tax basis. An investor may carry forward any disallowed deductions
and losses and deduct them in later years when the investor's basis has
increased (subject to application of the other limitations). It is anticipated
that each investor will have sufficient basis to claim all of Boston Capital's
deductions and losses. See "Calculation of Investor's Basis in Certificates"
below for a more complete discussion of these issues.
(c) At-Risk Limitation. For each year, an investor who is an individual or a
closely held corporation may not deduct from taxable income his or her share of
Boston Capital's deductions and losses to the extent they exceed the investor's
at-risk amount at the end of the year. An investor will generally have an
initial at-risk amount equal to the purchase price of the certificates. This
initial at-risk amount will increase by (1) such investor's share of Boston
Capital's income and gains and (2) increases in such investor's share of
qualified nonrecourse debt and will decrease by (1) such investor's share of
Boston Capital's deductions and losses, (2) the amount of cash and other
distributions made to such investor and (3) decreases in such investor's share
of qualified nonrecourse debt. The utilization of tax credits by an investor who
is an individual or a closely held corporation will also be subject to at-risk
116
<Page>
limitations which provide that, in order to fully utilize the tax credits, the
investor must be at-risk with respect to the tax credit property.
Based upon Boston Capital's anticipated investments, the at-risk rules should
not limit the deductions or federal housing tax credit available to investors.
See "At-Risk Limitation on Credits and Losses" below for a more complete
discussion of these issues.
ALLOCATION OF FUND INCOME, GAIN, CREDITS AND LOSS. Allocations of a
partnership's income, gain, credits, loss or deduction under a partnership
agreement will be given effect for federal income tax purposes if the
allocations have "substantial economic effect" or are otherwise in accordance
with the partner's interest in the partnership, taking into account all facts
and circumstances. It is the opinion of Counsel that substantially all of Boston
Capital's allocations will be respected for tax purposes. Boston Capital will
not invest in an operating partnership without obtaining an opinion of Counsel
that substantially all of the allocations under such Operating Partnership
Agreement will be respected for tax purposes. There can be no assurance,
however, that the IRS will not successfully challenge the allocations of profits
and losses or tax credits under the Fund Agreement or any Operating Partnership
Agreement.
DEPRECIATION. In determining profits and losses for tax purposes, a
partnership's income for any year is reduced by deductions representing
depreciation of the partnership's assets. While deductions will be made on a
property-by-property basis, Boston Capital generally expects to claim straight
line depreciation over 27.5 or 40 years with regard to all depreciable real
property owned by the operating partnerships.
HISTORIC TAX CREDIT AND ITS RECAPTURE. In addition to the federal housing tax
credit, the historic tax credit generally is available for certain
rehabilitation expenditures incurred in improving certified historic structures
and certain other buildings originally placed in service before 1936. If an
expenditure is a qualified rehabilitation expenditure on a certified historic
structure, the taxpayer is entitled to a credit equal to 20% of the expenditure
against his or her income tax liability for that year.
Boston Capital may invest in operating partnerships that incur rehabilitation
expenditures that will qualify for such historic tax credit, which would then be
available to investors to reduce their federal income taxes, but the ability of
an investor to utilize such credits may be restricted by the passive loss and
credit limitation rules.
Any historic tax credit taken for qualified rehabilitation expenditures is
subject to recapture in the event of early disposition of the property within
five years from the date it is placed in service. See "Historic Tax Credit" and
"Recapture of Tax Credits" below for a more complete discussion of these issues.
117
<Page>
TAX TREATMENT OF CERTAIN PARTNERSHIP EXPENSES. Boston Capital and each operating
partnership may incur costs for which there is a conflict of authority regarding
deductibility or the timing of deductibility and there is no assurance that the
IRS will not challenge certain claimed deductions. The tax treatment of these
items depends, to a significant extent, upon factual issues as the exact type
and description of the services to be provided, whether in fact the payments are
made as compensation for such services or whether such payments are actually
cash distributions or syndication fees, whether the services provided are
ordinary and necessary to the business of the partnership in question, and
whether the amounts of the payments are reasonable. Since these issues vary on a
case by case basis, Counsel cannot render an opinion on these issues. See
"Certain Fees and Expenses" below for a more complete discussion of these
issues.
SALES OR DISPOSITION OF OPERATING PARTNERSHIP PROPERTY. Each operating
partnership's gain on a sale of property will be measured by the difference
between the sale proceeds (including the amount of any indebtedness to which the
property is subject) and the adjusted basis of the property. Consequently, the
amount of tax payable by an investor on his or her share of Boston Capital's
allocable share of such gain may in some cases exceed his or her share of the
cash proceeds therefrom.
Where a taxpayer disposes of his or her entire interest in a passive activity in
a transaction in which all of the gain or loss realized on such disposition is
recognized, any loss from that activity that was disallowed by the passive loss
rules will cease to be treated as a passive loss and any loss on such
disposition will not be treated as arising from a passive activity. Depending
upon the circumstances, the disposition of a property by an operating
partnership may be subject to these rules. See "Sales or Other Disposition of an
Apartment Complex and Interest in Operating Partnerships" below for a more
detailed discussion of these issues.
SALES OR DISPOSITION OF CERTIFICATES. Any gain realized on a sale of
certificates by an investor who is not a "dealer" in the certificates or other
similar securities generally will be a capital gain. In determining the amount
received upon the sale or exchange of a certificate, an investor must include,
among other things, his or her allocable share of Boston Capital's allocable
share of each operating partnership's nonrecourse indebtedness.
Where a taxpayer disposes of his or her entire interest in a passive activity in
a transaction in which all of the gain or loss realized on such disposition is
recognized, any loss from that activity that was disallowed by the passive loss
rules will cease to be treated as a passive loss and any loss on such
disposition will not be treated as arising from a passive activity. Depending
upon the circumstances, the disposition by an investor of his or her
certificates may result in the application of this rule. See "Sale or
Disposition of Certificates" for a more complete discussion of these issues.
118
<Page>
TRANSFERABILITY--TERMINATION OF BOSTON CAPITAL. The tax code provides that if
50% or more of the capital and profit interests in a partnership are sold or
exchanged within a single twelve-month period, such partnership generally will
terminate for federal income tax purposes. Consequently, under the Fund
Agreement, 50% or more of the certificates may not be sold or exchanged within a
single twelve-month period.
TAX RATES AND CAPITAL GAINS. The maximum individual tax rate is now 35% for
ordinary income. In addition, capital gains income is generally subject to a
maximum marginal tax rate of 15%. However, with regard to the sale or exchange
of real property, capital gains which represents the recapture of depreciation
taken on such property will be taxed at a maximum rate of 25%.
The maximum corporate tax rate is 35%, which commences at a taxable income of
over $10 million, income up to $10 million is taxed at 34%; income up to $50,000
is taxed at 15% and income between $50,000 and $75,000 is taxed at 25%, with the
benefits of these graduated rates phased out beginning at $100,000.
ALTERNATIVE MINIMUM TAX. Noncorporate and corporate taxpayers, except for
certain qualifying small corporations, are subject to an alternative minimum
tax. Tax credits cannot be used to offset alternative minimum tax liability. Tax
credits which cannot be used because of the alternative minimum tax
restrictions, may be carried back one year or forward twenty years, with certain
restrictions. See "Certain Other Tax Considerations--Alternative Minimum Tax"
below for a more complete discussion.
TAX RETURNS AND TAX INFORMATION. Although partnerships are not subject to
federal income taxation, they must file annual partnership income tax returns.
For each taxable year, each investor must report on his or her federal income
tax return his or her share of Boston Capital's income, gains, losses,
deductions and credits, regardless of whether he or she has received any cash
distributions from Boston Capital. The IRS is paying increased attention to the
proper application of the tax laws to limited partnerships whose interests are
sold to a large number of investors. As a consequence, IRS audits of Boston
Capital's tax information returns are likely. Investors should note that a
federal income tax audit of Boston Capital's tax information returns may result
in an audit of the returns of some or all of the investors.
TAX SHELTER REGISTRATION. The tax code includes two special provisions with
respect to tax shelters. First, it requires the promoters of tax shelters to
maintain lists of investors and to make such lists available to the IRS. Second,
it requires that the tax shelter register with and furnish certain information
to the IRS. Boston Capital will be treated as a tax shelter for purposes of
these requirements.
119
<Page>
CHANGES IN TAX LAW. There may be changes to the tax code in future years
(including amendments having a retroactive effect) which could adversely affect
an investment in Boston Capital.
OPINIONS OF COUNSEL
Counsel is of the opinion that, to the extent that the summary of federal income
tax consequences to the investors set forth in this "Federal Income Tax Matters"
section and under the headings "Risk Factors--Federal Income Tax Risks" and
"Government Assistance Programs--Low Income Housing Tax Credit" involves matters
of law, such statements are accurate in all material respects under the tax
code, regulations and existing interpretations thereof and address fairly the
principal aspects of each material federal income tax issue relating to an
investment in Boston Capital. Based on the assumptions and representations
described herein, Counsel is of the opinion that for federal income tax
purposes: (1) Boston Capital will be classified as a partnership and not as an
association taxable as a corporation; (2) Boston Capital will not be treated as
a publicly traded partnership for purposes of Section 7704 or Section 469(k) of
the tax code; (3) each investor will be permitted to include in his or her tax
basis his or her share of the non-recourse liabilities of Boston Capital,
including Boston Capital's share of such liabilities of each operating
partnership; (4) the profits and losses and tax credits will be allocated among
the investors substantially in accordance with the Fund Agreement; and (5) the
profits and losses (other than the portion thereof classified as portfolio
income) and tax credits of Boston Capital will be treated as derived from a
passive activity.
Boston Capital has not yet identified any particular investment in an operating
partnership, however, and the tax benefits available to investors necessarily
will depend in large part upon the characteristics of the particular investments
acquired. Prior to investing in any operating partnership, Boston Capital will
obtain an opinion of Counsel, which may be based on assumptions and on
representations from Boston Associates and the general partners of that
operating partnership, and on certain opinions of counsel to that operating
partnership, substantially to the effect that for federal income tax purposes
(1) the operating partnership will be classified as a partnership and not as an
association taxable as a corporation; (2) the operating partnership will be the
owner of the relevant apartment complex; (3) the profits and losses and tax
credits of the operating partnership will be allocated to the Partnership
substantially in accordance with the Operating Partnership Agreements; (4) for
purposes of determining its tax basis and amount at-risk for the operating
partnership, Boston Capital will be permitted to take into account its properly
allocable share of such operating partnership's nonrecourse liabilities; and (5)
assuming (a) that the apartment complex owned by the operating partnership
satisfies the income and rent restrictions applicable to apartment complexes
generating federal housing tax credits, (b) that the
120
<Page>
apartment complex receives its State Designation and (c) that the apartment
complex continues to comply with the income and rent restrictions, that an
investor will be entitled to his or her share (based on his or her interest in
the losses of Boston Capital) of Boston Capital's share (based on Boston
Capital's interest in losses of the operating partnership) of federal housing
tax credits generated by an apartment complex. No investment in any operating
partnership will be made unless the opinion of Counsel referred to in this
paragraph is obtained. See "Investment Objectives and Acquisition
Policies--Acquisition Policies."
However, no legal opinion has been obtained, and it is not anticipated that an
opinion will be obtained in connection with an investment in an operating
partnership, regarding determinations, the correctness of which depends in
significant part on future factual circumstances, as to matters peculiar to
certain investors or as to matters on which opinions are not customarily
obtained. Such determinations may include (1) the allocation of basis among
various components of a property, particularly as between buildings, the cost of
which is depreciable, and the underlying land, the cost of which is not
depreciable; (2) the characterization of various expenses and payments made to
or by Boston Capital or an operating partnership (for example, the extent to
which such payments represent deductible fees or interest); (3) the portion of
the cost of any apartment complex that qualifies for the tax credits, including
the federal housing tax credit or the historic tax credit; and (4) the
application to any specific investor of the limitation on the availability of
passive activity losses and credits. There can be no assurance, therefore, that
some of the deductions to be claimed by Boston Capital or the allocation of
items of income, gain, credits, loss and deduction among the investors, will not
be challenged by the IRS and that such challenge will not be sustained by the
courts. Such challenge, if successful, could have a detrimental effect on the
ability of Boston Capital to realize its investment objectives. See also "Risk
Factors--Tax Risks Associated with Boston Capital's Investments."
TAX RATES
Effective in 2003, there are six marginal tax rates for individual taxpayers,
namely, 10%, 15%, 25%, 28%, 33%, and 35%. The 10% marginal tax rate applies to
the first $12,000 of taxable income for a joint return and the first $6,000 in
taxable income for a single person's return. The 15% marginal tax rate applies
to taxable income between $12,000 and $57,850 for a joint return and taxable
income between $6,000 and $30,950 for a single person's return. The current 25%
marginal tax rate applies to taxable income between $59,250 and $128,000 for a
joint return and taxable income between $31,700 and $76,800 for a single return.
From that point taxable income is taxed at the current 28% marginal tax rate up
to $195,050 and $160,250 for joint and single returns. Then the current 33%
marginal tax rate applies until $348,350 in both joint and single returns. Any
taxable income over $348,350 is
121
<Page>
currently taxed at the 35% marginal tax rate. Capital gains income is generally
subject to a maximum marginal tax rate of 15% for individuals. However, with
regard to the sale or exchange of real property, capital gains which represents
the recapture of depreciation taken on such property will be taxed at a maximum
rate of 25%.
The tax code provides for a graduated corporate tax rate. For corporations,
taxable income up to $50,000 will be taxed at 15%, taxable income over $50,000
but not over $75,000 will be taxed at 25%, taxable income over $75,000 will be
taxed at 34%, and taxable income over $10 million will be taxed at 35%. The
benefit of the graduated rates is gradually phased out for corporations with
more than $100,000 of taxable income. If for any year a corporation is subject
to tax at rates in excess of 35%, any net capital gain recognized by the
corporation in that year is taxed at 35%, and the remainder of the income is
taxed at the higher rate.
CLASSIFICATION AS A PARTNERSHIP
The availability of any tax benefits to an investor is dependent upon the
classification of Boston Capital and the operating partnerships as partnerships,
rather than as associations taxable as corporations, for federal income tax
purposes.
Boston Capital does not intend to request a ruling from the IRS that it will be
classified as a partnership for federal income tax purposes. Counsel has
rendered, and in connection with each investment date, will render its opinion
that Boston Capital will be classified as a partnership for federal income tax
purposes. In addition, Boston Capital will require, in connection with its
acquisition of interests in any operating partnership, that Counsel render an
opinion to the effect that the operating partnership will be classified as a
partnership for federal income tax purposes. Boston Associates and Counsel are
aware that the IRS would not issue an advance ruling to Boston Capital or the
operating partnerships with respect to their classification as partnerships for
federal income tax purposes because, pursuant to its published procedures, the
IRS will not issue such an advance ruling where the general partners of a
partnership are not obligated to restore deficits in their capital accounts to
the extent of 1% of the capital contributions to such partnership of all limited
partners.
The IRS has recently published new regulations that remove some of the
uncertainty regarding whether an entity will be classified as a partnership.
These new regulations provide that entities that are not required to be treated
as corporations may now elect their tax classification. For domestic entities, a
newly created entity with at least two members will automatically be treated as
a partnership, unless it elects to be treated otherwise. Neither Boston Capital
nor the operating partnerships will make such an election.
122
<Page>
If the IRS were to challenge the classification of Boston Capital or any of the
operating partnerships as partnerships, Counsel is of the opinion that such
challenge would be unsuccessful. If, however, an IRS challenge were successful,
or if there is a material change in the law or the circumstances surrounding
Boston Capital or any of the operating partnerships, Boston Capital or any of
the affected operating partnership(s), might be treated as associations taxable
as corporations. In such event, the income of each such entity would be taxable
directly to such entity and any distributions to its partners would be treated
as dividends to the extent of current and accumulated earnings and profits of
the partnership. Moreover, tax credits and partnership losses (which include
depreciation) would then be reflected only on the partnership's tax return,
rather than being passed through to investors. This would eliminate
substantially all of the tax benefits of a purchase of certificates.
Furthermore, such change in the tax status of Boston Capital and/or any of the
operating partnerships could create tax liability for an investor.
The 1987 Tax Act enacted new tax code Section 7704, which provides that publicly
traded partnerships will be treated as corporations for federal income tax
purposes. A publicly traded partnership is a partnership in which interests are
traded on a securities exchange or on a secondary market or the substantial
equivalent thereof. The Report of the Senate-House Conference Committee
accompanying the 1987 Tax Act indicates that if interests in a partnership are
readily tradable, then even in the absence of any established market, if trading
in such interests occurs, interests in the partnership may be treated as
publicly traded. IRS regulations and a notice from the IRS (Advance Notice
88-75) provide guidance on the types of transfers that will result in a
partnership being deemed to be publicly traded. A partnership which is publicly
traded will not be treated as a corporation if at least 90% of its gross income
consists of qualifying "passive-type" income. This income includes interest,
dividends, rents from real property and gain from the sale of real property.
Boston Associates has represented that at least 90% of Boston Capital's gross
income will consist of qualifying "passive-type" income.
It is the opinion of Counsel that, if the foregoing representation is correct,
Boston Capital will not be treated as a corporation pursuant to Section 7704 of
the tax code for federal income tax purposes. There is limited guidance
available for interpreting this provision of the 1987 Tax Act, however, and no
assurance can be given that the IRS will concur with this view. In the event
this passive income exception were not to apply to Boston Capital, Boston
Capital could be taxable as a corporation if it did not meet one of the "safe
harbors" in the above-referenced IRS regulations and notice. If in the future
Boston Capital becomes taxable as a corporation, under the Fund Agreement,
Boston Associates may take any and all such actions it may deem necessary or
appropriate to qualify Boston Capital (or a successor entity) for taxation as a
pass-through entity. Such action may include, but shall not be
123
<Page>
limited to, amending the Fund Agreement, reorganizing Boston Capital into some
other form of pass-through entity, or imposing restrictions on the
transferability of certificates. Some forms of reorganization may cause Boston
Capital (and therefore investors) to recognize the appreciation in Boston
Capital's assets as taxable income. Boston Associates is required to effectuate
any such qualification, amendment or reorganization so that, to the extent
possible and legally permissible under the circumstances, the respective
interests of the investors and Boston Associates in the assets and income of
Boston Capital (or successor entity), immediately following such qualification,
amendment or reorganization, are substantially equivalent to such interests
immediately prior thereto.
CLASSIFICATION OF INVESTORS AS PARTNERS FOR TAX PURPOSES
The availability of any tax benefits to an investor is also dependent on the
investor being treated as a limited partner of Boston Capital for federal income
tax purposes. Under Delaware law, investors will not be partners of Boston
Capital. Rather, investors will hold an assignment from the Assignor Limited
Partner of an interest in the Assignor Limited Partner's limited partnership
interest in Boston Capital. Counsel is of the opinion, however, that investors
will be treated as partners of Boston Capital for federal income tax purposes,
and that their payments for certificates will be treated as direct capital
contributions to Boston Capital in exchange for such certificates. If investors
were not considered to be partners of Boston Capital for federal income tax
purposes, ownership of certificates might be treated as the ownership of an
equity interest in the Assignor Limited Partner or the ownership of some other
contractual right against the Assignor Limited Partner, in which case none of
the profits, credits and losses of Boston Capital would be passed through to
them directly from Boston Capital. Such treatment might cause Boston Capital's
distributions to be included in the gross income of investors for federal income
tax purposes.
FUND ALLOCATIONS AND DISTRIBUTIONS
(1) GENERAL. No federal income tax is paid by a partnership. Boston Capital will
file an information return with the IRS, however, and each investor is required
to report on his own federal income tax return his allocable share of the
income, gains, credits, losses and deductions of Boston Capital, whether or not
any cash distribution was made to such investor during such taxable year.
A partner is permitted to offset his allocable share of partnership losses in
any taxable year against his income from other sources, but only to the extent
of his adjusted basis for his interest in Boston Capital at the end of the
partnership year in which such losses occur. Any excess of such losses over such
adjusted basis may be deducted by a partner in subsequent tax
124
<Page>
years to the extent that such partner's adjusted tax basis at the end of any
such year exceeds zero before reduction by such loss in such year.
The Operating Partnerships are expected to incur certain tax credits and losses.
Counsel has advised Boston Capital that an investor may report on his federal
income tax return his allocable share, as finally determined for federal income
tax purposes, of Boston Capital's share of such credits and losses incurred by
each of the operating partnerships. However, an opinion of counsel is not
binding on the IRS, and Boston Capital has not requested and will not receive an
advance ruling concerning whether such "pass-through" of profits, credits and
losses will be recognized for tax purposes. Were such "pass-through" to be
denied, the tax benefits of a purchase of certificates would be very
substantially reduced.
In general, each investor must treat Boston Capital items on his return
consistently with the treatment of those items on Boston Capital's return. The
tax code imposes restrictions on the ability of individual taxpayers, personal
service corporations, estates and trusts to use credits and losses from
interests in activities in which the taxpayer does not materially participate
("passive activities"), such as limited partnership interests; such restrictions
will apply to certificates. With exceptions for special provisions applicable to
tax credits, such taxpayers can only use such credits and losses from such
passive activities to offset income or tax liability from passive activities,
and may not use such losses to offset active income or portfolio income (e.g.
interest, dividends, royalties).
These rules do not apply to most C Corporations. Such corporations may use
losses from passive activities to offset any form of income. C Corporations that
are closely held are subject to limited passive loss restrictions. Such
corporations may use passive losses to offset active income or tax liability,
but not portfolio income or tax liability. See "Passive Loss and Credit
Limitations" below in this section.
(2) CALCULATION OF INVESTOR'S BASIS IN HIS CERTIFICATES. Subject to the at-risk
rules discussed below, a partner's tax basis for his interest in a limited
partnership includes principally the amount of money he contributes to such
partnership, his allocable share of the partnership's recourse liabilities to
the extent that he bears the economic risk of loss for such liability, and his
allocable share of liabilities as to which neither the partnership nor any
partner nor any person related to any partner is personally liable ("nonrecourse
liabilities"), to the extent such liabilities (including interest that accrues
with respect thereto and effectively is added to principal) do not exceed the
fair market value of the property securing such liabilities. A partner's tax
basis is increased by his allocable share of any partnership income, and it is
decreased (but not below zero) by: (1) distributions received by him from the
partnership (including for this purpose his allocable share of a decrease in
nonrecourse liabilities), (2) his allocable share
125
<Page>
of partnership losses and (3) his allocable share of the partnership's share of
any reduction in the basis of an apartment complex attributable to historic tax
credits. However, no reduction in a partner's tax basis is required as a result
of the allocation of federal housing tax credits.
Boston Capital will not itself directly own the apartment complexes but is to be
a limited partner in the operating partnerships which own the apartment
complexes. Counsel will render its opinion to Boston Capital that the tax basis
of each investor will include his allocable share of Boston Capital's share of
any mortgage and other indebtedness incurred by the operating partnerships,
provided that neither the operating partnerships nor any partner therein has
personal liability with respect to such indebtedness. In giving its opinion,
Counsel will be relying, in part, on a published Revenue Ruling of the IRS.
However, Boston Capital does not intend to request an IRS advance ruling with
respect to this issue, and such opinion of Counsel is not binding on the IRS.
In certain circumstances, all or a portion of the debt incurred by an operating
partnership may be guaranteed by an operating general partner or a person
related to an operating general partner. This would result in all or portion of
such debt being treated as recourse debt. Boston Capital, and thus the
investors, would not be able to include any such guaranteed portion of such debt
in basis. See "Allocation of Profits, Credits, Losses and Other Items in
Accordance with the Fund Agreements."
Boston Capital will require, in connection with its acquisition of an interest
in any operating partnership, that Counsel render an opinion to the effect that
any mortgage indebtedness incurred by the operating partnership constitutes a
nonrecourse liability (except to the extent of any guaranteed portion in the
circumstances described above) for federal income tax purposes. Such opinion of
Counsel will be based, and rely, upon an opinion of counsel to the operating
partnership that, under local law, no partner of the operating partnership has
or will have personal liability with respect to such mortgage indebtedness.
A partner's pro rata share of the nonrecourse liabilities includable in basis is
calculated in accordance with (1) such partner's share of the minimum gain of
the partnership and (2) such partner's proportionate share of the profits of the
partnership. If an investor's share of the profits of Boston Capital were to be
challenged and successfully reallocated by the IRS, it could result in a
reduction of such investor's basis in Boston Capital. Since an investor cannot
deduct losses in an amount greater than his adjusted tax basis at the end of
Boston Capital's tax year, any reduction in basis could have the effect of
limiting the ability of an investor to deduct losses currently and could
consequently trigger gain. Unused losses may be carried forward and may be
deductible in subsequent years to the extent that such investor has available
126
<Page>
tax basis in such years. See "Allocation of Profits, Credits, Losses and Other
Items in Accordance with the Fund Agreements," below.
(3) ALLOCATION OF PROFITS, CREDITS, LOSSES AND OTHER ITEMS IN ACCORDANCE WITH
THE FUND AGREEMENT. Section 704(b) of the tax code provides that tax credits be
allocated in accordance with the respective partners' shares of losses or
deductions attributable to the expenditures that give rise to such credits.
Accordingly, tax credits will be allocated to Boston Capital by each operating
partnership, and to the investors by Boston Capital, respectively, in accordance
with their respective shares of the losses of each operating partnership, and of
Boston Capital, respectively.
Regulations under Section 704(b) of the tax code governing allocations of losses
attributable to guarantees of nonrecourse debt by affiliates of partners treat
any nonrecourse indebtedness of a partnership which is guaranteed or held in
whole or in part by a partner or "a person related to a partner" (as that term
is defined in the tax code), as recourse indebtedness for purposes of allocating
profit and loss. This means that losses attributable to the deemed recourse
indebtedness, and associated credits, would be allocated to those partners who
bore the economic risks associated with the guarantee.
It is possible that, in certain circumstances, all or a portion of the debt
incurred by an operating partnership will be guaranteed by an operating general
partner or a person related to an operating general partner. This would result
in the guaranteed portion of the debt being treated as recourse debt.
Accordingly (except as described in the next sentence), losses attributable to
such debt would be allocated to such operating general partner, and federal
housing tax credits attributable to such losses would also be allocated to such
operating general partner, rather than to Boston Capital and the investors.
However, the allocation of such credits and losses to any such operating general
partner would be required only to the extent that capital contributions of
Boston Capital to the applicable operating partnership were insufficient to
offset fully the losses allocable to it pursuant to the applicable Operating
Partnership Agreement. Boston Associates anticipates that Boston Capital will
only make acquisitions of interests in operating partnerships which will permit
the substantially full allocation (to the extent of the share of credits
allocable pursuant to the applicable Operating Partnership Agreement) of federal
housing tax credits to Boston Capital and, through it, to the investors.
Section 704(b) of the tax code provides that each partner's distributive share
of the profits, losses and other items of a partnership is determined in
accordance with the partnership agreement unless (a) the partnership agreement
does not provide for the allocation of each partner's distributive share of
profits or loss (or other item) or (b) the allocation to the partners under the
partnership agreement does not have "substantial economic effect," in which case
allocations will be made in accordance with such partners' interest in
127
<Page>
the partnership (taking into account all facts and circumstances). Substantial
economic effect is generally recognized to exist where the allocation of taxable
profits and losses actually affects the partners' shares of economic income or
loss independent of tax consequences.
Regulations with respect to the determination of partners' distributive shares
of partnership items provide clarification of the two part test for substantial
economic effect: (1) that all allocations have economic effect and (2) that such
effect must be substantial. With respect to the requirement of economic effect,
the Regulations provide, in general, that allocations have economic effect if:
(a) the partners' capital accounts are maintained properly and allocations of
items are reflected in adjustments to capital accounts, (b) liquidation proceeds
are required to be distributed in accordance with the partners' capital account
balances, and (c) following the distribution of such proceeds, partners are
required to restore any deficits in their capital accounts to the partnership.
The determination of whether an allocation has economic effect is made as of the
end of the partnership's taxable year to which the allocation relates. An
allocation that does not satisfy requirement (c) may nevertheless be deemed to
have substantial economic effect if the partnership agreement contains a
"qualified income offset."
The Regulations state that a partnership agreement contains a "qualified income
offset" if and only if it provides that a partner who unexpectedly receives
certain types of adjustments, allocations, or distributions in connection with
transfers of partnership interests and distributions of partnership property
which cause or increase a deficit balance in his capital account will be
allocated items of income and gain in an amount and manner sufficient to
eliminate such deficit balance as quickly as possible.
If an agreement satisfies the first two requirements above and has a "qualified
income offset" provision, then an allocation to a partner will have economic
effect to the extent such allocation (other than an allocation attributable to
nonrecourse debt) does not cause or increase a deficit in such partner's capital
account which is greater than such partner's obligation to contribute additional
capital to the partnership. In making this determination, the partner's capital
account must first be reduced to take into account certain allocations of loss
or deduction and/or distributions which have not yet occurred but which are
reasonably expected to occur in the future.
With respect to the substantiality requirement, the Regulations generally state
that an allocation must have a reasonable possibility of affecting the dollar
amounts to be received by the partners independent of tax consequences in order
to be substantial. An allocation is insubstantial if, as a result of the
allocation, the after-tax economic consequences of at least one partner may be
enhanced while there is a strong likelihood that the after-tax economic
consequences of no partner will be diminished. Furthermore, the Regulations
provide that allocations are insubstantial if they merely shift tax
128
<Page>
consequences within a partnership taxable year or are likely to be offset by
other allocations in subsequent taxable years.
Regulations with respect to allocations of loss and deductions attributable to
nonrecourse debt provide that allocations cannot have economic effect because it
is the creditor (rather than any partner) who bears the economic risk of loss
with respect to such indebtedness, but the Regulations provide that allocations
of loss and deductions attributable to such debt will be deemed to be made in
accordance with the partners' interests in the partnership if the following four
requirements are met: (a) partnership capital accounts are properly maintained
and liquidation distributions are made in accordance with capital account
balances, (b) the allocations of loss and deduction attributable to nonrecourse
debt are made in a manner that is reasonably consistent with some other
significant partnership item attributable to partnership property securing the
nonrecourse debt that has substantial economic effect, (c) the partnership
agreement must contain an obligation to restore deficit capital account balances
upon liquidation or a minimum gain chargeback and (d) all other material
partnership allocations and capital account adjustments must have substantial
economic effect.
A minimum gain chargeback is a provision in a partnership agreement which
requires that, if there is a net decrease in partnership minimum gain during a
partnership taxable year, all partners with deficit capital account balances at
the end of such year (in excess of any amount which such partner is obligated to
restore upon liquidation and such partner's share of partnership minimum gain)
will be allocated, before any other allocations for such taxable year, items of
income and gain for such year (and, if necessary, for subsequent years) in the
amount and in the proportions needed to eliminate such deficits as quickly as
possible.
The amount of partnership minimum gain is computed with respect to each
nonrecourse liability of the partnership by determining the amount of gain which
would be realized by the partnership if it disposed of the partnership property
subject to such liability in full satisfaction thereof, and by then aggregating
the amounts so computed. Special rules are provided for cases where property is
subject to more than one liability, and where property is subject to a debt that
is partially recourse and partially nonrecourse.
Regulations under Section 704(b) of the tax code also utilize a concept of
partner nonrecourse debt which includes indebtedness which is nonrecourse to the
partnership but with respect to which a partner or a related person is deemed to
bear the economic risk of loss. Such indebtedness is includable solely in the
tax basis of the partner or partners who bear the economic risk of loss, and any
allocations attributable to such indebtedness must be made to those partner(s)
who bear the economic risk of loss.
129
<Page>
The Regulations under Section 704(b) also require that to the extent the minimum
gain attributable to partnership nonrecourse debt or partner nonrecourse debt is
reduced, there must be a minimum gain chargeback (of income) to those partners
that had previously received allocations of losses or deductions attributable to
the minimum gain with respect to such debt.
In the case of Boston Capital, all allocations will result in adjustments in
Capital Accounts which will be maintained in accordance with the requirements of
the Regulations. Additionally, the Fund Agreement will contain a qualified
income offset provision, minimum gain chargeback provisions, and a provision
stating that liquidation proceeds will be distributed in accordance with each
partner's capital account. Consequently, it is anticipated that the allocations
provisions of the Fund Agreement will meet the requirements of the Regulations.
Regulations issued under Section 704 of the tax code provide that tax credits,
other than tax credits specifically subject to the Regulations under Section 46
of the tax code, are to be allocated in accordance with the allocation of the
deductions attributable to the expenditures relating to such credits. In the
case of the federal housing tax credits, the allocation would follow the
allocation of depreciation deductions of the apartment complex. Since
expenditures relating to the federal housing tax credits are expected to be
funded with investor capital contributions and nonrecourse indebtedness, the
allocation of federal housing tax credits to investors should be permitted in
the same ratio as the deductions for depreciation, which should permit
substantially all federal housing tax credits to be allocated to the investors
of Boston Capital. However, if Boston Capital's (as the limited partner of the
operating partnership) capital account has been reduced to zero at any time
during which the operating general partner has a positive capital account or has
personal liability with respect to operating partnership debt, then deductions
(and hence federal housing tax credits if during the credit period) would be
allocated to the operating general partner. It is possible that the IRS may
contend that an operating general partner's obligation to fund operating
deficits results in such operating general partner having personal liability on
an otherwise nonrecourse loan.
With respect to the allocation of historic tax credits, Regulation Section
1.46-3(f) provides that, in the case of a partnership, each partner takes into
account his share of the credit basis as if he were the direct purchaser of that
share of the property. A partner's share of the credit basis is determined in
accordance with his share of partnership profits on the date on which the
property involved is placed in service by the partnership.
Finally, because of certain fees payable to the operating general partners or
their affiliates by the operating partnerships, it is unlikely that Boston
Capital will receive any cash flow distributions from the operating partnerships
for a substantial period of time. On this basis, the IRS could contend that
Boston
130
<Page>
Capital has no economic interest in the operating partnerships and therefore
should not be treated as a partner of such operating partnerships, and thus is
not entitled to allocations of profits, losses or tax credits of the operating
partnerships. However, Boston Capital is legally entitled to cash earnings of
the operating partnerships if cash earnings are available in excess of amounts
required to pay fees, and to cash benefits if an apartment complex is sold or
refinanced, and the IRS has recognized the limited value of cash distributions
in low income housing investments in Revenue Ruling 79-300. Accordingly, even
though no cash flow is expected for a substantial period of time, Boston Capital
should still be treated as a partner in each of the operating partnerships.
Upon review of the Fund Agreement and assuming the Fund Agreement will be
executed in substantially this form, it is the opinion of Nixon Peabody LLP that
the allocations set forth in the Fund Agreement have "substantial economic
effect" and/or are in accordance with the interests of the partners (and
investors) in Boston Capital and that, while the outcome of litigation cannot be
predicted with certainty, it is more likely than not that, if the issue were
litigated, a court would so hold. Boston Capital will obtain an opinion of Nixon
Peabody LLP prior to making any investment in any operating partnership to the
effect that the allocations set forth in the Operating Partnership Agreement
have "substantial economic effect" and/or are in accordance with the interests
of the partners in the operating partnership and that, while the outcome of
litigation cannot be predicted with certainty, it is more likely than not that,
if the issue were litigated, a court would so hold.
It is possible that in certain circumstances all or a portion of the debt
incurred by an operating partnership will be guaranteed by an operating general
partner or a person related to an operating general partner. This would result
in the guaranteed portion of the debt being treated as recourse debt.
Accordingly, losses attributable to such debt would be allocated to the
operating general partner and federal housing tax credits attributable to such
losses would also be allocated to the operating general partner, rather than to
Boston Capital and investors. However, the allocation of such losses and credits
to the operating general partner would be required only to the extent that
capital contributions of Boston Capital to the operating partnership were
insufficient to offset fully the losses allocable to it pursuant to the
Operating Partnership Agreement. Boston Associates anticipates that Boston
Capital will only make acquisitions of interests in operating partnerships which
will permit the substantially full allocation of federal housing tax credits to
Boston Capital and the investors.
Counsel's opinion assumes that the capital account balances (as that term is
defined in the Fund Agreement and the Operating Partnership Agreements) of the
partners of Boston Capital, or the partners of an affected operating
partnership, as applicable, are not significantly adjusted by reason of a
131
<Page>
termination of Boston Capital or an operating partnership, or by reason of
capital contributions (such as, for example, unanticipated advances of capital
from general partners which may be deemed for federal income tax purposes to be
capital contributions), other than the capital contributions provided for in the
Fund Agreement and the Operating Partnership Agreements. Counsel's opinion also
assumes, in those instances where there are guarantees of operating partnership
debt by an operating general partner or a person related to an operating general
partner, that the capital account balances of Boston Capital in such operating
partnerships are sufficient to permit the allocation of credits and losses to
Boston Capital. If such capital accounts are insufficient, Counsel would be
unable to render such opinion.
Because unanticipated circumstances may occur with respect to Boston Capital
which would affect the allocations of profits, credits and losses, the Fund
Agreement provides, and the Operating Partnership Agreements will provide,
authority to the appropriate general partner, upon the advice of the tax
advisors to the applicable partnership, to vary the allocations of profits,
losses and credits, or any item thereof, from that contained in the partnership
agreements in any year in order to preserve and protect the allocations of
profits and losses to all partners (and investors) of Boston Capital and all
partners (including Boston Capital) of the operating partnerships. See "Sharing
Arrangements: Profits, Credits, Losses, Net Cash Flow and Residual--Authority of
Boston Associates to Vary Allocations to Preserve and Protect Partners' and
Investors' Intent."
If a court were to conclude that any of such allocations lack substantial
economic effect and are not in accordance with the partners' (and investors')
interests in Boston Capital or the applicable partners' interests in an
operating partnership, partnership income, gain, credit, loss or deduction (or
items thereof) could be reallocated to Boston Capital and/or its partners and
investors in a manner substantially less favorable than that set forth in the
applicable Operating Partnership Agreement and/or the Fund Agreement.
(4) ADVANCES TREATED AS DEBT FOR FEDERAL INCOME TAX PURPOSES. If a partnership
borrows funds and the terms of the loan, as well as other facts and
circumstances surrounding the loan, indicate that the funds may be in the nature
of an equity contribution rather than a loan, the IRS could contend that the
advance should not be treated as debt for federal income tax purposes. Advances
by partners or affiliates in the form of nonrecourse loans are particularly
susceptible to such a challenge. If such a challenge were successful, (a) no
interest deductions would be permitted with respect to the advance, (b) the
"lender" may be treated as a partner in the partnership entitled to a
distributive share of partnership items of income, gain, credit, loss or
deduction, and (c) the other partners would not be permitted to include the loan
as a partnership liability for purposes of computing their tax basis in their
partnership interests. If the lender is
132
<Page>
already a partner, and the funds were to be treated as an additional equity
contribution, the IRS might contend that such partner is entitled to a greater
share of the losses and credits of the partnership than those allocated to the
partner in the partnership agreement.
It is uncertain how the law in this area may be applied to particular facts.
Because of such uncertainty and because the terms and conditions of future
advances, if any, by either the applicable general partner(s) of an operating
partnership or of Boston Capital cannot be foreseen, Counsel is unable to
predict at this time the outcome of any challenge by the IRS to Boston Capital's
or an operating partnership's treatment of any such loans.
(5) ALLOCATION OF PROFITS, CREDITS AND LOSSES TO INVESTORS IN YEAR OF PURCHASE
OF CERTIFICATES. Subject to the rules governing basis limitations and passive
losses, an investor will be entitled to deduct his pro rata share of Boston
Capital's losses in the year he purchases certificates, based upon the length of
time that he is an investor during the year. Although the tax code does not
specifically provide for any method other than a daily allocation method, the
legislative history of the 1984 Tax Act indicates that until regulations are
issued by the Treasury Department providing for the appropriate method, a
partner admitted to a partnership may be permitted to receive his share of the
partnership's profits and losses for the entire month he is admitted to Boston
Capital, regardless of what day in the month the admission occurs. The Treasury
Department has the authority to issue regulations which are more restrictive
than this monthly convention.
The legislative history of the 1986 Tax Act indicates that allocations of
federal housing tax credits to partners of partnerships should be determined in
accordance with the same rules as the general partnership profit and loss
allocation rules. Boston Capital intends to allocate such tax credits on the
basis of the interest in losses of an investor, or of Boston Capital in an
operating partnership, as applicable, beginning with the month in which such
investor purchases certificates, or Boston Capital acquires an interest in an
operating partnership, as applicable.
The rules for allocating historic tax credits are different from those rules for
federal housing tax credits discussed above, however, and provide that only
investors who are admitted to Boston Capital on or prior to the date the
building as to which such tax credits are claimed is placed in service will be
allocated their share of the historic tax credits; correspondingly, Boston
Capital must have acquired its interest in the applicable operating partnership
on or prior to the date the applicable building is placed in service in order to
receive any allocation of the historic tax credits.
With respect to federal housing tax credits, special rules for determining the
amount of credit that is available apply for the first year that a building is
133
<Page>
occupied by low-income tenants. See "Tax Credit Programs--The Federal Housing
Tax Credit-Utilization of the Federal Housing Tax Credit."
(6) ALLOCATION OF PROFITS, CREDITS AND LOSSES UPON SALE OF CERTIFICATES. The
Fund Agreement provides that on the sale of certificates, Boston Capital's
profits, credits and losses and cash distributions during the year of the sale
will be allocated and distributed to the purchaser from and after the first day
of the month following the transfer, or by any other agreed upon method approved
by Boston Capital's tax advisors. There can be no assurance that the IRS would
not challenge the use of any such allocation other than a daily allocation
method. See "Sale or Disposition of Certificates" below in this section.
FEDERAL HOUSING TAX CREDIT
The tax code provides for a tax credit for investments in low income housing
constructed, acquired or rehabilitated after 1986, as described under "Tax
Credit Programs--The Federal Housing Tax Credit."
Boston Capital will not acquire interests in an operating partnership unless it
receives an opinion from Counsel that, assuming (a) that the apartment complex
owned by the operating partnership satisfies the income and rent restrictions
applicable to apartment complexes generating federal housing tax credits, (b)
that the apartment complex receives its State Designation and (c) continuing
compliance with the income and rent restrictions, it is more likely than not
that an investor will be entitled to his share (based on his interest in the
losses of Boston Capital) of Boston Capital's share (based on Boston Capital's
interest in losses of the operating partnership) of federal housing tax credits
generated by an apartment complex. However, because of the many factual issues,
no opinion will be rendered as to whether any particular apartment complex
qualifies for the federal housing tax credit. See "Tax Credit Programs--The
Federal Housing Tax Credit."
STATE DESIGNATION OF APARTMENT COMPLEXES
All apartment complexes, except those financed through the proceeds of
tax-exempt bonds subject to the tax-exempt bond limitation included in the tax
code, must be allocated federal housing tax credit authority by the applicable
state or local credit agency. Failure of an apartment complex to receive State
Designation or to meet initially the applicable income and rent restrictions
would result in the denial of all federal housing tax credits with respect to an
apartment complex. This would materially reduce the tax benefits to an investor
of a purchase of certificates. At the time Boston Capital is admitted to an
operating partnership, it is possible that the operating partnership will not
yet have received its State Designation, or will not have rented a sufficient
number of units in the apartment complex to know whether the income level and
the rent restriction tests can be met. The Operating Partnership Agreements are
anticipated to provide for a repurchase of Boston
134
<Page>
Capital's interest by the operating general partners if, among other things, an
apartment complex does not receive its State Designation in the year in which
the apartment complex is placed in service or has not met both the income level
and rent restriction tests within twelve months after an apartment complex is
placed in service. See "Investment Objectives and Acquisition
Policies--Acquisition Policies." Although Boston Associates will use its best
efforts to reinvest promptly any funds received on such a repurchase in
operating partnerships owning apartment complexes eligible for federal housing
tax credits (subject to the limitations set forth in "Investment Objectives and
Acquisition Policies--Acquisition Policies"), there is no assurance that Boston
Associates will be able to reinvest the proceeds of such a repurchase in new
operating partnerships. Any reinvestment is likely to cause a delay in obtaining
tax credits. In addition, it is possible that the proceeds may be reinvested in
operating partnerships that have already begun the ten-year federal housing tax
credit period, which would result in a reduced amount of federal housing tax
credits. See "Investment Objectives and Acquisition Policies--Unused or Returned
Funds."
HISTORIC TAX CREDIT
As described in "Tax Credit Programs--Historic Tax Credit," the tax code
provides for a separate tax credit equal to 20% of qualified rehabilitation
expenditures for certified historic structures. It is anticipated that a portion
of the net proceeds of the offering may be used to invest in operating
partnerships owning apartment complexes eligible for historic tax credits.
With respect to any non-profit operating partnership, an amount of otherwise
qualified rehabilitation expenditures equal to the tax-exempt entity's highest
proportionate share of any interest in an apartment complex will not be eligible
for historic tax credits.
The entire historic tax credit can be claimed only in the year in which the
property generating the credit is placed in service. Each investor would be
entitled to take into account separately his allocable share of the historic tax
credit attributable to any qualified investment on the date the property is
placed in service. Investors acquiring certificates after such date will not be
entitled to any portion of the historic tax credit.
The use of the historic tax credit is limited by the amount that the taxpayer
has at-risk with respect to the investment that generates the historic tax
credit. In addition to the at-risk requirements described in "Federal Income Tax
Matters--At Risk Limitations," a taxpayer must be at-risk for a minimum of 20%
of the credit base of the property. To the extent that a taxpayer is protected
against loss through guarantees, stop-loss agreements, or other similar
arrangement, a taxpayer may not be considered at-risk with respect to his
investment. Capital contributions made by Boston Capital to an operating
partnership may be subject to an adjuster, repurchase or other "stop-loss"
provision. It is possible that the IRS will argue that investors will not be
135
<Page>
deemed to be at-risk with respect to their capital contributions until such
provision terminates, thus deferring their ability to utilize tax credits for
expenditures funded with their capital contributions. Based on the Proposed
Regulations under Section 465 of the tax code, the determination of this issue
would likely depend upon whether any adjuster or repurchase provision would
effectively protect investors against loss in all likely situations. It is
possible that the IRS will argue that an obligation given to Boston Capital by
an operating partnership to repurchase its operating partnership interest or to
return its capital contributions will be treated as a guarantee or stop-loss
agreement. Given the lack of direct authority on this issue, Counsel is unable
to predict the outcome of any such challenge. If a court were to conclude that a
repurchase obligation provides protection against loss in a similar manner as a
guarantee or stop-loss agreement, then the credit base for purposes of
determining historic tax credits may be reduced in an amount equal to Boston
Capital's equity investment in the applicable operating partnership, resulting
in a denial of historic tax credits.
Certain Operating Partnership Agreements could, but are not currently
anticipated to, provide for a repurchase of Boston Capital's operating
partnership interest (or in certain circumstances a reduction in the capital
contributions of Boston Capital to the applicable operating partnership) in the
event the apartment complex does not receive certification from the United
States Secretary of the Interior within certain time limits, but only if Boston
Capital receives an opinion of Counsel that it is more likely than not that such
repurchase and reduction obligations would not be treated as a guarantee or
stop-loss agreement. As of the date of this Prospectus and based on current law,
Counsel anticipates that it will be unable to render a favorable opinion in such
a situation. In the event that such repurchase and reduction obligations are
included in an Operating Partnership Agreement and either of such events occurs,
there is no assurance that Boston Associates will be able to reinvest the
proceeds in operating partnership interests meeting the investment objectives of
Boston Capital, and any reinvestment would probably cause a delay in obtaining
any tax credits, and any such tax credits might or might not include historic
tax credits. See "Investment Objectives and Acquisition Policies."
Boston Capital will not acquire interests in an operating partnership owning an
apartment complex eligible for historic tax credits unless it receives an
opinion of Counsel that assuming that: (a) an apartment complex meets the
requirements for the historic tax credit and (b) Boston Capital has acquired its
interest in the operating partnership at or prior to the time the apartment
complex owned by the operating partnership is placed in service, each investor
who acquired his certificates at or prior to the time the apartment complex is
placed in service will be entitled to his share (based on his interest in the
profits of Boston Capital) of Boston Capital's share (based on Boston Capital's
share of profits in the applicable operating partnership) of
136
<Page>
historic tax credits generated by such apartment complex. However, because of
the many factual issues, no opinion will be rendered as to whether any
particular apartment complex qualifies for the historic tax credit.
PASSIVE LOSS AND TAX CREDIT LIMITATIONS
Tax code Section 469 imposes limits on the ability of certain taxpayers as
described below to use losses and credits from so-called "passive activities" to
offset taxable income and tax liability arising from non-passive sources. A
passive activity includes (a) one which involves the conduct of a trade or
business in which the taxpayer does not materially participate, or (b) any
rental activity. With certain limited exceptions, a limited partner will not be
treated as materially participating in a limited partnership's activities. With
the exception of the portion of the partnership's income that is portfolio
income, based on the anticipated activities of Boston Capital, Counsel is of the
opinion that the profits, credits and losses of Boston Capital will be treated
as derived from a passive activity.
Portfolio income generally includes net income from the activity that is derived
from interest, dividends, annuities or royalties, unless such income is derived
in the ordinary course of a trade or business, and any gain or loss from the
disposition of property that produces portfolio income or that is held for
investment. Any income, gain or loss that is attributable to an investment of
working capital also will be treated as portfolio income. Although the matter is
not free from doubt due to the factual nature of the issue, it is anticipated
that the activities of Boston Capital will constitute the conduct of a trade or
business. Consequently the portfolio income of Boston Capital will primarily
consist of interest earned on its invested reserves, which could amount to a
substantial allocation of portfolio income. Prospective investors should be
aware that the Department of Treasury has reserved the right to recharacterize
other types of income from passive activities as portfolio income, and that
proposed regulations have been issued which would recharacterize certain types
of "self-charged" interest income as passive activity income. Foreign tax
credits are not subject to the passive loss rules.
INDIVIDUALS. Individual taxpayers may use tax credits from passive activities to
offset certain amounts of tax liability from non-passive sources. Individuals
can utilize tax credits to offset taxes on up to $25,000 of active or portfolio
income. Thus, an individual taxed at the 28% tax rate could use tax credits to
offset $7,000 (28% x $25,000) in taxes on such income, and an individual taxed
at the 33% or 35% tax rate could use tax credits to offset $8,250 and $8,750,
respectively, in taxes on such income. Married individuals filing separately may
each use tax credits to offset taxes on up to $12,500 of non-passive income, but
only if they have lived apart for the entire year. Otherwise, married
individuals filing separately may not utilize tax credits to offset taxes on
non-passive income.
137
<Page>
Tax credits in excess of the $25,000 limit are subject to the general rules
governing passive activities. Under these general rules in tax code Section 469,
individual taxpayers generally are allowed to use credits or deduct losses
generated by passive activities only to the extent of income or tax liability
generated by passive activities. If an individual investor has no passive income
for a taxable year against which losses can be offset, or no passive income tax
liability against which passive credits may be used, any losses and credits
allocated to him will be carried forward to the succeeding taxable year. Thus,
tax credits in excess of the $25,000 limit can be used by such taxpayers only
against tax liability arising from passive activities or carried forward
pursuant to the passive activity loss limitation rules.
Losses of limited partners from limited partnerships owning apartment complexes
are not eligible for the $25,000 allowance. Thus, they are subject to the
general rules under Section 469 and can only be used against passive income or
be carried forward. Upon disposition of an interest, any unused passive losses
that were carried forward by an investor may be used without limitation, first
to offset any capital gain realized upon disposition and any remaining losses
may be used to offset any active income as directed by Section 469.
Notwithstanding the foregoing, investors subject to the alternative minimum tax
would still have to take into account the alternative minimum tax passive loss
limitations.
For taxpayers with adjusted gross income of less than $150,000, and who actively
manage rental real estate properties, there is an exception to the general rule
which allows their losses from these properties to be eligible for up to a
$25,000 allowance each year. For taxpayers with adjusted gross income of between
$100,000 and $150,000 there is a gradual phaseout of the $25,000 yearly
allowance. However, the $25,000 amount each year is an aggregate allowance for
both credits and losses of the same taxpayer. Accordingly, if a taxpayer has
both eligible credits and losses, the losses from the active rental activities
must be used before the credits. In addition, credits other than federal housing
tax credits (such as historic tax credits) must be used before federal housing
tax credits.
With respect to historic tax credits only (and not with respect to federal
housing tax credits), individual taxpayers will have this special $25,000
exception phased out if their adjusted gross income is in excess of $200,000.
With respect to federal housing tax credits, pursuant to the Omnibus Budget
Reconciliation Act of 1989, the previously existing $200,000-$250,000 adjusted
gross income limitation was repealed with respect to federal housing tax credits
generated by apartment complexes which are placed in service after 1989 and as
to which an interest is acquired after 1989.
Under the 1987 Tax Act, income, credits and losses of a partnership classified
as a publicly traded partnership are also characterized as passive income,
138
<Page>
credits and losses from a separate activity. Credits and losses from an
investment in a publicly traded partnership can only be used as an offset
against income subsequently generated by the publicly traded partnership, and
income from a publicly traded partnership cannot be sheltered by losses from
other passive activities. Federal housing tax credits or historic tax credits
generated by a publicly traded partnership must first be used to reduce the
income of the publicly traded partnership before it may reduce income from other
sources. However, it is not anticipated that Boston Capital will be classified
as a publicly traded partnership. See "Classification as a Partnership" above in
this section.
CORPORATIONS. Except as described below, corporations are generally not subject
to limitations on their use of passive credits and losses and can utilize such
credits and losses against any type of income or the tax liability attributable
to any type of income, except as provided below. Two types of corporations,
however, are subject to limitations: closely held C Corporations and personal
service corporations. Closely held C Corporations are those C Corporations that
at any time during the last half of the taxable year were more than 50% owned,
by value, directly or indirectly by five or fewer individuals. For the purposes
of such a determination, stock held by related parties is taken into account
pursuant to special stock attribution rules. Members of a family who are a
spouse, a brother or sister, or an ancestor or lineal descendant of a
shareholder are counted together with that shareholder as a single shareholder.
Unlike regular C Corporations, closely held C Corporations may not use passive
losses and credits to offset tax liability attributable to portfolio income.
Closely held corporations which are not personal service corporations are
allowed to utilize their passive activity losses and their passive activity
credits to offset their tax liabilities arising from net active income.
Generally this special exemption would allow such closely held corporations to
shelter their taxable income from other sources, other than portfolio income,
with credits and losses from passive activities; however, because of the at-risk
limitations discussed below, closely held C Corporations could receive a lower
yield on their investment than other investors if an apartment complex receives
financing which is not qualified nonrecourse financing for purposes of the
at-risk rules in sections 465 and 49 of the tax code.
Personal service corporations are only allowed to use passive credits and
losses, including tax credits, to shelter passive income or tax liability
attributable to passive income. For this purpose, the term "personal service
corporation" is defined to mean a corporation the principal purpose of which is
the performance of personal services in the fields of health, law, engineering,
architecture, accounting, actuarial science, performing arts, or consulting, and
such services are substantially performed by any employee who owns, on any day
during the year, any of the outstanding shares of such corporation. For this
purpose, stock held by related parties is taken into account pursuant to special
stock attribution rules generally similar to those described in the
139
<Page>
previous paragraph for closely held corporations. In general, if the
compensation paid in any manner to the shareholders of the corporation who
perform such services is more than 20% of the total compensation paid to all
employees, the corporation will be classified as a personal service corporation.
Corporations, the principal purpose of which is the performance of personal
services, are strongly advised to consult their professional advisors regarding
their classification as personal service corporations for this purpose.
Since a corporation subject to Subchapter S of the tax code is treated as a
pass-through entity for federal tax purposes, each shareholder is generally
subject to the limitations on the use of tax credits and passive losses which
apply to individuals.
ALL TAXPAYERS. Notwithstanding the exemption from the passive activity
limitations for most C Corporations, two other restrictions may prevent current
use of tax credits by all taxpayers. First, tax credits cannot be used to offset
tax attributable to the alternative minimum tax. Second, tax credits are subject
to the rules governing general business credits which limit the amount of tax
liability which may be offset by business credits in any one year. Under this
rule, the amount of tax credits which may be used is equal to $25,000 of regular
tax liability plus 75% of any remaining regular tax liability, subject to the
limits of the tentative minimum tax. Once tax credits have been made available
under the $25,000 limitation, those tax credits are treated as credits arising
from an active, rather than a passive, activity. Tax credits which cannot be
used because of the foregoing restrictions of the alternative minimum tax and
general business credit rules may be carried back one year or forward twenty
years. For taxpayers subject to the passive loss rules, those taxpayers with tax
liabilities attributable to net passive income may use tax credits to offset
that tax, subject to the limitation on business credits described above and the
alternative minimum tax. Any excess passive tax credits may be carried forward
and used indefinitely, but not back, against tax liability attributable to net
passive income in future years, subject to the above limitations in those years.
AT-RISK LIMITATION ON CREDITS AND LOSSES
Sections 465 and 49 of the tax code place limits on the amount of credits, and
of losses, that may be used by individuals and closely-held corporations, which
limits relate to the amount which any such taxpayer has at-risk. Generally,
partners will be deemed to be at risk for purposes of calculating credit base,
and of deducting losses, with respect to nonrecourse financing if it is
qualified nonrecourse financing.
Under Section 465 of the tax code, the deduction of losses from an activity,
including real estate activities, is limited to the amount such a taxpayer has
at-risk with respect to the activity. However, the tax code provides an
140
<Page>
exemption from the at risk rule for real property, if it is financed with
certain third-party nonrecourse debt.
Under Section 49 of the tax code, the credit base for purposes of determining
the amount of available tax credits is limited to the basis of the property less
any nonqualified nonrecourse financing. In addition, with respect to historic
tax credits, no more than 80% of the credit base for purposes of computing the
historic tax credit may consist of nonrecourse financing, nor may the financing
be obtained from a related party. See "Historic Tax Credit" above in this
section.
It is anticipated that, in most instances, the permanent mortgage loan obtained
by an operating partnership will be nonrecourse financing from third parties
unaffiliated with Boston Capital, the operating partnership or any partners, and
that such financing will qualify as qualified nonrecourse financing for purposes
of Section 465 and Section 49 of the tax code.
In certain instances, however, all or a portion of otherwise nonrecourse debt
may be guaranteed by an operating general partner or a person related to an
operating general partner. This would result in Boston Capital and the investors
being unable to include such financing in the basis for purposes of the at-risk
rules, and could delay or prevent the allocation of losses, and credits
attributable to depreciation losses, to Boston Capital and the investors, but
would not adversely affect the at-risk basis for purposes of generating credits.
Nonetheless, Boston Associates anticipates making acquisitions only in those
operating partnerships which will not limit the availability of credits.
Assuming that the permanent mortgage loans are qualified nonrecourse financing,
in the opinion of Counsel it is more probable than not that the at-risk rule
will not limit the availability to an investor of credits, nor limit the
deduction by an investor of losses, resulting from inclusion in basis of such
permanent mortgage loans.
It is anticipated that the operating partnerships will pay Development Fees to
the operating general partner or its affiliates. It is likely that such
Development Fees will accrue in one taxable year but be paid over a two to
three-year period. The operating partnerships intend to include the full amount
of such accrued Development Fees in Eligible Basis for purposes of federal
housing tax credits, and, where applicable, in basis for purposes of computing
historic tax credits. The IRS may contend that any portion of the Development
Fee which will not be paid currently is not properly includable in basis. If the
IRS were successful, the amount of the tax credits would be delayed or reduced.
Because of the lack of judicial or regulatory guidance with respect to this
issue, Counsel is unable to predict the outcome of such a challenge.
141
<Page>
PURCHASE OF EXISTING APARTMENT COMPLEXES FROM TAX-EXEMPT OR
GOVERNMENTAL ENTITIES
For purposes of the at-risk rules, qualified nonrecourse financing includes any
loan from a federal, state or local government and certain financing from a
"qualified person." The definition of qualified person generally excludes the
person from whom the taxpayer acquired the property. Therefore, purchase money
indebtedness is generally excluded from the at-risk basis for purposes of the
federal housing tax credits. However, Section 42 of the tax code provides an
exception to this rule for purchase money indebtedness from a qualified
nonprofit organization, which is generally defined to include tax-exempt
organizations, including governmental entities, engaged in fostering low-income
housing. If (a) no more than 60% of the tax credit basis represents such
purchase money indebtedness, (b) the interest rate on the indebtedness is not
lower than 1% less than the applicable federal rate, (c) the financing is
secured by the qualified low-income building (which in certain instances would
require prior approval of any government agency providing government assistance)
and (d) the financing will be repaid on or before the earlier of maturity or the
end of the initial fifteen-year compliance period, then the full amount of such
financing may be included in the federal housing tax credit basis.
Boston Capital may acquire interests in operating partnerships which will use
the above described form of financing to purchase existing apartment complexes
from tax-exempt entities. It is anticipated that the sale by a tax-exempt entity
of an apartment complex to an operating partnership would be for a combination
of cash, assumption of any mortgage indebtedness and a purchase money note. It
is likely that in any such transaction, the tax-exempt entity will have recently
acquired the apartment complex from an unrelated taxable entity. Under such
circumstances, it is likely that the taxable entity sold the apartment complex
to the tax-exempt entity for a price below its fair market value, with the
difference between the sale price and fair market value being treated as a
charitable contribution. Such a transaction is known as a bargain sale.
If an operating partnership acquires an apartment complex from a tax-exempt
entity under such circumstances, the IRS may attempt to recharacterize the
transaction. The IRS may argue that the bargain sale to the tax-exempt entity by
the taxable entity and the subsequent resale to an operating partnership should
be ignored for tax purposes, and may seek to treat the transaction as a direct
purchase by the operating partnership from the taxable entity. If the IRS were
successful, any purchase money indebtedness would be excluded from the tax
credit basis for the apartment complex, thus materially reducing the tax
benefits to investors. Counsel is unable to predict the outcome of any such
challenge.
142
<Page>
As a separate matter, even if the IRS were to respect the form of the
transaction, the IRS could challenge the value of an apartment complex acquired
with purchase money indebtedness notwithstanding the proper inclusion of such
indebtedness for at-risk purposes. An owner of property may not include in basis
indebtedness deemed not to be bona fide indebtedness for federal income tax
purposes. Cases and rulings by the IRS have held that a nonrecourse purchase
money note may not be included in basis for federal income tax purposes unless
the fair market value of the property at least approximately equals the sum of
all indebtedness incurred in connection with the property.
If an operating partnership were to acquire an apartment complex using purchase
money indebtedness, an appraisal will be obtained from an independent qualified
appraiser supporting the purchase price of the apartment complex (and any
anticipated accrued but unpaid interest on indebtedness in connection with the
financing thereof). However, because the issue of fair market value is
essentially factual, and because such value is not presently ascertainable,
Counsel cannot predict the outcome if the value of such an apartment complex
were challenged by the IRS.
In any event, not more than 20% of Boston Capital's investment in operating
partnership interests with respect to any series of certificates will be
comprised of acquisitions of interests in operating partnerships using the form
of acquisition financing described above.
INVESTMENT BY TAX-EXEMPT ENTITIES
Investments in the certificates may be offered to tax-exempt entities which have
and expect to continue to have income subject to federal income taxation
sufficient to use the tax credits expected to be derived from an investment in
Boston Capital.
Tax-exempt entities, such as pension funds and non-profit corporations,
generally are exempt from taxation except to the extent that "unrelated business
taxable income" ("UBTI") (determined in accordance with Sections 511-514 of the
tax code) exceeds $1,000 during any fiscal year. A tax-exempt entity may have
UBTI from other businesses in which it owns an interest. In addition, it will
have UBTI if a partnership in which it has an interest either (1) is determined
to be a publicly traded partnership (see discussion under "Classification as a
Partnership" above in this section), or (2) owns "debt-financed property," that
is, property in which there is "acquisition indebtedness" (in accordance with
Section 514(d) of the tax code), and the partnership earns interest income from
the debt-financed property or realizes gains or losses from the sale, exchange
or other disposition of the debt-financed property.
The tax code does not impose restrictions on the acquisition of interests in
partnerships such as Boston Capital by pension plans and non-profit
cor-
143
<Page>
porations. However, the application of the rules governing federal housing
tax credits as applied to tax-exempt entities is unclear. This is a
complicated area and those entities should consult their own tax advisors
with regard to the tax aspects of such investments.
Persons maintaining pension plans should bear in mind that the tax attributes of
an investment in Boston Capital by such plans do not flow through to the
individual maintaining the accounts. Thus, for example, an individual
beneficiary of a pension plan that purchases certificates will not receive the
tax benefit of credits or deductions from Boston Capital because he cannot claim
such credits or deductions on his own individual income tax return and they are
of no benefit to the tax-exempt entity as long as it is exempt from tax.
The trustee or custodian of a pension plan which purchases certificates may be
required to file Form 990-T (Exempt Organization Business Income Tax Return)
with the IRS to report UBTI, if any, and to pay from the employee pension
benefit plan the tax on any such income in excess of $1,000.
RECAPTURE OF TAX CREDITS
An investor who has received federal housing tax credits will be subject to the
recapture of a portion of such credits taken in prior years, plus interest, if
either: (1) an apartment complex fails to remain in compliance with the income
and rent restrictions, (2) Boston Capital disposes of its interest in an
operating partnership or (3) an operating partnership sells an apartment
complex.
Generally, any change in ownership of a building during the federal housing tax
credit compliance period is an event of recapture, unless a bond is posted, or
treasury securities are pledged, by the seller with the Secretary of the
Treasury in an amount satisfactory to the Treasury, and it can be reasonably
expected that the building will continue to be operated as a qualified low
income building for the remainder of such compliance period. Similarly, a
disposition by Boston Capital of its interest in an operating partnership will
result in recapture of the accelerated portion of the federal housing tax
credits taken with respect to the applicable apartment complex unless Boston
Capital posts a bond as described above. In either event--the disposition of a
building or the disposition of Boston Capital's interest in an operating
partnership the posting of the bond or the pledging of treasury securities
allows Boston Capital to avoid recapture of any federal housing tax credits
previously taken with respect to the applicable operating partnership.
An apartment complex eligible initially to receive federal housing tax credits
must remain in compliance with the income and rent restrictions for a period of
fifteen years beginning with the first day of the first taxable year in which
the credit is claimed. Failure of an apartment complex to meet the income and
rent restrictions will result in a recapture of a portion of all of such cred-
144
<Page>
its taken in prior years, plus interest, and will result in a disallowance of
the credit for the year of the recapture event. During the first eleven years
of the compliance period, if requirements are not met, one-third of the
credits earned up to that point are recaptured, plus interest; between years
eleven and fifteen, the recapture is phased out ratably so that in year
fifteen only 1/15 of previously taken credits attributable to the
non-complying dwelling units in the applicable apartment complex would be
recaptured, plus interest.
If there is a decrease in the Qualified Basis of an apartment complex, but the
Minimum Set-Aside Test and Rent Restriction Test are still being met with
respect to other units in the apartment complex, there would be a recapture with
respect to the decrease in Qualified Basis under the same formula as described
in the immediately preceding sentence. See "Tax Credit Programs--The Federal
Housing Tax Credit-Eligible Basis and Qualified Basis."
In addition to the recapture of previously taken federal housing tax credits,
failure to maintain the income and rent restrictions throughout the compliance
period would also result in loss of credits for future years. However,
correction of the noncompliance within a "reasonable" time period would prevent
the occurrence of a recapture event.
Recapture of prior years' credits and loss of future years' credits would
materially reduce the tax benefits to an investor and the recapture could have
significantly adverse tax consequences to an investor.
Pursuant to Section 42(j)(5) of the tax code, certain partnerships are deemed to
be "treated as the taxpayer" for purposes of the recapture, which means that
partners in such partnerships may transfer their interests without recapture and
without posting a bond or pledging securities.
Such partnerships are those which have at least thirty-five partners. Because
Boston Capital has at least that many investors, Boston Capital intends to elect
to be treated as the taxpayer under Section 42(j)(5). Thus, no recapture will
result to the transferor investor on the disposition of certificates (as long as
within a twelve-month period at least 50% (in value) of the ownership is
unchanged). However, if a recapture event occurs during the period the
transferee investor owns certificates, the transferee investor will be required
to recapture a portion of the federal housing tax credits previously taken by
the transferor investor. See "Tax Credit Programs--The Federal Housing Tax
Credit."
With respect to any historic tax credits claimed, such credits will be
recaptured if a qualifying apartment complex is disposed of by an operating
partnership, or Boston Capital disposes of its interest in an operating
partnership, prior to the expiration of five years from the date the
rehabilitated apartment complex was placed in service. For purposes of
determining the recapture of historic tax credits, a disposition is deemed to
occur upon any sale,
145
<Page>
exchange, transfer, distribution, involuntary conversion, gift or lease of the
property, or the occurrence of any other event which causes the property to
cease to qualify for the historic tax credit. The recapture amount would be
equal to 100% of the historic tax credit if disposition occurs within the first
year, phasing down ratably to 20% of the credit in year five. In addition, even
if the apartment complex is not sold, or Boston Capital does not dispose of its
interest in the operating partnership, recapture will be triggered if a
partner's or investor's interest in profits is reduced to two-thirds or less of
the interest in profits that such partner held when the apartment complex was
placed in service. Once this threshold is met, the recapture amount is equal to
the extent of the reduction of the partner's or investor's interest in profits.
There is no recapture of historic tax credits after the apartment complex has
been in service for five years.
If a taxpayer is subject to recapture, and is liable for any additional tax, no
unused credits may be used to offset that liability.
DEPRECIATION
(1) GENERAL. The tax code permits owners of depreciable real and personal
property to take an annual deduction for depreciation based on the entire cost
of such property (without regard to salvage value) over a statutorily determined
recovery period. Deductions for depreciation commence when depreciable property
is placed in service.
(2) DEPRECIATION OF REAL AND PERSONAL PROPERTY. The recovery period over which
depreciation deductions will be taken with respect to the real property of the
apartment complexes is 27.5 years using the straight line method, pursuant to
the provisions of the tax code. However, with respect to any non-profit
operating partnership, an amount equal to the tax-exempt entity's highest
proportionate share of any interest in an apartment complex will be depreciated
over forty years using the straight line method.
The operating partnerships also will use shorter recovery periods and the
accelerated depreciation methods prescribed by the tax code for personal
property used in the apartment complexes. As a result of such election, most
personal property used in the apartment complexes, such as appliances, will be
depreciated over a seven-year period based on the 200% declining balance method,
switching to the straight line method at a time that will maximize the allowable
deductions.
Although the tax code prescribes the recovery period that a taxpayer may use for
its depreciable assets, there are, however, still some issues relating to the
computation of depreciation with respect to which there may be uncertainty.
These include, for example, the allocation of costs among depreciable and
nondepreciable property and among different classes of depreciable property, the
inclusion of certain capitalized fees in the depreciable basis of the property,
and the proper time for commencing depreci-
146
<Page>
ation, that is, when the improvements are first placed in service. Such
issues are factual, and, for that reason, Counsel cannot predict the outcome
of a challenge with regard to them.
CONSTRUCTION PERIOD EXPENDITURES
(1) CONSTRUCTION PERIOD INTEREST AND TAXES. Pursuant to the tax code,
construction period interest and taxes must be capitalized. Accordingly, all
construction period interest and taxes attributable to the apartment complexes
will be added to the depreciable basis of the apartment complexes.
In addition, in the case of partnerships, except to the extent provided in yet
to be released regulations, this provision applies at the partner level to the
extent that any partnership debt is less than the total capitalized cost of
constructing an apartment complex. Although it is not yet entirely clear, to the
extent that a partner has interest expense attributable to a trade or business
unrelated to his interest in a partnership, it is possible that such interest
expense may be required to be capitalized.
For purposes of the tax code, the relevant "construction period" is determined
on a building-by-building basis for each of the buildings in an apartment
complex. The construction period begins when the construction of each building
commences and ends when the building is ready to be placed in service.
"Construction period interest" includes interest accrued during the construction
period on any construction loan and interest on any deferred development fees
payable to general partners during this period.
(2) OTHER EXPENSES INCURRED DURING THE CONSTRUCTION PERIOD. Section 195 of the
tax code classifies certain expenditures as start-up expenditures that must then
be permanently capitalized or, at the election of the taxpayer, amortized over a
period of sixty months beginning with the month in which the active trade or
business begins. A start-up expenditure is defined to include an amount paid or
incurred in connection with "any activity engaged in for profit and for the
production of income before the day on which the active trade or business begins
in anticipation of such activity becoming an active trade or business," and
which would be otherwise allowable as a deduction if paid or incurred in
connection with an existing active trade or business. Under tax code Section
195, the Treasury Department is authorized to prescribe regulations which will
determine when an active trade or business begins. In light of its position in
certain litigation before the enactment of tax code Section 195 in its current
form, the IRS is expected to take the position that a real estate partnership
has not begun carrying on an "active trade or business" until the dwelling units
it is constructing are ready for occupancy. Accordingly, each operating
partnership will treat that portion of the operating partnership's management
fees, if any, and other ordinary and necessary expenses incurred before its
first dwelling units are ready for occupancy as start-up expenses, to be
amortized over a period of sixty months.
147
<Page>
FEES PAID FROM CAPITAL CONTRIBUTIONS OR BOSTON CAPITAL OR OPERATING
PARTNERSHIP CASH FLOW
Boston Capital intends to pay various fees to Boston Associates and/or its
affiliates. The operating partnerships intend to pay the operating general
partner(s) and/or their affiliates certain fees. Boston Capital will pay an
Acquisition Fee to Boston Capital Holdings Limited Partnership, and certain
other offering and syndication fees to affiliates of Boston Associates, from the
capital contributions of the investors, for services rendered to Boston Capital
in acquiring and managing the business and assets of Boston Capital. It is
anticipated that the operating partnerships will pay Development Fees to the
operating general partners or their affiliates, from the capital contributions
of Boston Capital to the applicable operating partnership, for services rendered
to the applicable operating partnership in the development of the applicable
apartment complex, Boston Capital will pay an annual Fund Management Fee to
Boston Capital Asset Management Limited Partnership from the cash flow of Boston
Capital, and it is anticipated that the operating partnerships will pay annual
Reporting Fees to an affiliate of Boston Associates, and annual partnership
management fees and property management fees to the operating general partners
or affiliates thereof, in each case from cash flow of the applicable operating
partnership.
Boston Capital and the operating partnerships will not deduct or amortize any
amounts relating to the above fees which are deferred until such amounts are
paid, unless specifically provided by the tax code. Further, any portion of such
fees related to services performed in the acquisition of property used in an
apartment complex owned by an operating partnership will be amortized over 27.5
years. The Acquisition Fee will be amortized over a period roughly corresponding
to the depreciable life of the apartment complex (and a portion over forty years
with respect to a non-profit operating partnership).
Offering expenses will be capitalized by Boston Capital and not deducted or
amortized. Organization expenses will be amortized over sixty months.
Under Section 267 of the tax code, a partnership may not deduct unpaid amounts
of deductible business expenses accrued and owing to a cash basis partner (or
any person related to that partner) until those amounts are paid or taken into
income. Boston Capital and the operating partnerships intend to deduct all
expenses in accordance with these provisions.
All fees attributable to the construction of the apartment complexes will be
capitalized in accordance with Section 263A of the tax code.
All expenditures of Boston Capital and the operating partnerships must
constitute ordinary and necessary business expenses in order to be deducted when
incurred, unless the deduction of any such item is otherwise expressly permitted
by the tax code (e.g., interest and certain taxes). In addition, the
148
<Page>
expenditures must be reasonable in amount and be for services which do not
represent an expense required to be capitalized and which are performed during
the taxable years in which paid or accrued, rather than for future years. Any
compensation paid to a partner for services must be for services rendered other
than in his capacity as a partner or must be determined without regard to
partnership income.
The payment of the various fees for services from capital contributions is not
determined by arm's-length negotiations. Instead, the amounts of the payments
are determined on the basis of the experience of Boston Associates and its
affiliates in this area and on the basis of their (and in connection with the
operating partnerships, the operating general partners') judgment of the value
of the services provided. Boston Associates believes that the fees described
above represent compensation for services rendered, and that such fees are
reasonable and comparable to the compensation that would be paid to unrelated
parties for similar services.
It is possible, however, that the IRS will challenge one or more of these
payments and contend that the amount paid for the services exceeds the
reasonable value of those services, in which case the IRS would seek to disallow
as a deduction that portion of the amount paid which is determined to be in
excess of the reasonable value of the services. It is probable that an amount
disallowed as a deduction would be capitalized and amortized over some period of
years. In addition, the IRS might accept the reasonableness of a fee, but
contend that the fee should be deducted in a later year, or be capitalized
rather than deducted, or be amortized over a period longer than the period
chosen by Boston Capital or an operating partnership. Because the issues of the
reasonableness of such fees, or the period to which such fees relate, are
factual, Counsel cannot predict the outcome in the courts of a challenge by the
IRS with respect to such issues. However, if in fact the payments are made as
compensation for services, if the services provided are ordinary and necessary
to the business of Boston Capital or an operating partnership, and if the amount
of any fee is determined to be reasonable, Counsel believes that it is more
probable than not that, if litigated, the treatment of such fee described above
would be upheld.
SALE OR DISPOSITION OF CERTIFICATES
Pursuant to the 1997 Taxpayer Relief Tax Act, gain or loss recognized by an
investor on the sale of certificates will generally be taxed at the same rate as
the investor's other ordinary income, except that for capital gains a ceiling on
the tax for individuals is set at 20% (except with regard to the sale or
exchange of real property, in which case the capital gains which represent the
recapture of depreciation taken on such property are taxed at a maximum rate of
25%) and for corporations at 35%. In computing such gain or loss, the selling
investor's allocable share of Boston Capital's share of any existing nonrecourse
liabilities of the apartment complexes is
149
<Page>
included in the amount realized, and an investor may offset against any gain by
the amount of any suspended passive losses. An investor who does not have
suspended passive credits or losses to offset any gain may realize taxable gain
and the sale may not result in cash proceeds sufficient to pay the tax
obligations arising from such sale. Investors may also be subject to recapture
of a portion of prior tax credits claimed if they sell or dispose of all or a
portion of their certificates, if such disposition, in connection with other
dispositions of their interests by other investors, results in 50% or more of
all interests in Boston Capital being disposed of within a twelve-month period.
See "Calculation of Investor's Basis in His Certificates," "Passive Loss and Tax
Credit Limitations" and "Recapture of Tax Credits" above.
A gift of certificates may also have federal income and/or gift tax
consequences. See "Certain Other Tax Considerations--Consequences of Gift or
Death" below in this section.
Although it is unlikely that a market will develop, and therefore investors may
not be able to dispose of their certificates, Boston Capital anticipates issuing
certificates in a form permitting trading. See "Description of
Certificates--Transfers." If 50% or more of the total interests in Boston
Capital profits and capital (including certificates) are sold or exchanged
within a twelve-month period, Boston Capital will terminate for federal income
tax purposes. If a termination occurs, the assets of Boston Capital will be
deemed to be constructively contributed to a new partnership, and then the
interests in this new partnership are deemed to be distributed to the partners.
Boston Associates has the authority under the Fund Agreement to (1) halt trading
of the certificates, (2) fail to list and/or cause the delisting of certificates
from public trading markets, (3) cause each purchaser of certificates to be
admitted to Boston Capital as a limited partner, (4) require investors to become
limited partners or (5) take such other action as may be necessary or
appropriate in order to preserve the status of Boston Capital as a partnership
or to prevent certain other adverse federal income tax consequences, however, no
assurance can be given that such action(s) could be taken prior to a deemed
termination. An investor would not realize gain upon the deemed distribution of
Boston Capital's assets unless the portion of Boston Capital's cash
constructively distributed to an investor exceeds his adjusted basis in his
certificates. Boston Associates does not anticipate that available cash would
exceed the aggregate basis of the investors' interests; therefore, it is
anticipated that no gain will be realized upon a termination.
Section 754 of the tax code permits a partnership to elect to adjust the
transferee's share of basis of partnership property upon the transfer of an
interest in the partnership by the partner; this provision is equally applicable
to a transfer of certificates. Boston Capital does not currently intend to make
such an election.
150
<Page>
SALE OR OTHER DISPOSITION OF AN APARTMENT COMPLEX AND INTERESTS IN
OPERATING PARTNERSHIPS
In determining the amount received upon the sale, exchange or other disposition
of an apartment complex, an operating partnership must include, among other
things, the amount of any liability to which such apartment complex is subject
if the purchaser assumes, or takes the apartment complex subject to, such
liability. For these purposes, a foreclosure of a mortgage on an apartment
complex is deemed to be a disposition of the property. The amount of any
outstanding nonrecourse mortgage indebtedness to which transferred property is
subject will be treated as money received by the seller, even when the fair
market value of the property in question is less than the outstanding balance of
the mortgage indebtedness secured by the property. Accordingly, the unpaid
principal balance of any mortgage loan indebtedness discharged by foreclosure
will reduce any loss which might otherwise result upon foreclosure or could
produce a taxable gain even though the operating partnership receives no cash
from the foreclosure.
To the extent that Boston Capital's assets sold constitute Section 1231 property
(i.e., real property used in a trade or business and held for more than one year
and depreciable personal property used in a trade or business and held for more
than one year), an investor's share of the gains and losses would be combined
with any other Section 1231 gains or losses incurred by the investor in that
year and the net Section 1231 gain or loss would be treated as long-term capital
gain (subject to depreciation recapture, if any) or ordinary loss, as the case
may be. See "Tax Rates" for a discussion of tax rates applicable to capital
gains.
In the event that Boston Capital or an operating partnership sells any personal
property at a gain, 100% of all cost recovery allowances previously deducted are
subject to recapture as ordinary income.
An apartment complex may be sold under an installment plan. Gain from
installment sales by non-dealers of real property used in a taxpayer's trade or
business or held for the production of rental income can be reported in the year
payments are received from the purchaser in the profit ratio represented by each
payment. However, interest is required to be paid with respect to the deferred
tax liability attributable to an installment obligation that arises out of such
a sale during a year and is outstanding as of the close of the year if the face
amount of all such obligations that arise during a year and which are
outstanding at the close of the year for such taxpayer and certain related
taxpayers exceed $5 million. If interest is required to be paid with respect to
an obligation during the year in which the obligation arises, interest must be
paid for any remaining deferred tax liability in any subsequent taxable year if
any portion of the obligation is outstanding at the end of that year.
151
<Page>
Section 42 of the tax code permits, but does not require, the owner of an
apartment complex to grant to the tenants, a qualified nonprofit organization or
a governmental agency a right of first refusal to purchase the apartment complex
for an amount equal, at least, to the amount of the indebtedness secured by the
building and all taxes attributable to the sale. It is possible that some of the
operating partnerships may enter into such agreements. The investors would be
taxed on the purchase price, including the amount attributable to the taxes on
the sale.
EXCESS INVESTMENT INTEREST LIMITATION
The deductibility of investment interest by a non-corporate taxpayer is subject
to substantial limitation by Section 163(d) of the tax code. In the case of
Boston Capital, such limitation would be applied to each investor individually
rather than to Boston Capital. Investment interest is interest incurred on funds
borrowed to acquire or carry property held for investment. Pursuant to the 1986
Tax Act and subject to certain phase-in rules, excess investment interest is
investment interest incurred in a year in excess of net investment income. The
excess is not deductible in the current year but the amount not deductible in
the current year may be deductible in subsequent years, subject to the same
limitation.
The 1986 Tax Act expanded the definition of investment interest to include all
interest expense of a limited partnership allocable to a limited partner.
However, interest incurred in connection with a "passive activity" that is
subject to the passive activity loss restriction is not subject to the
investment interest limitation. Since Boston Capital will be subject to the
passive activity loss restriction, most interest expense incurred by Boston
Capital will not be subject to the investment interest limitation. Interest
expense, if any, attributable to the production of portfolio income would be
subject to the investment interest limitation.
CERTAIN TAX ELECTIONS
Boston Capital may make various elections for federal income tax reporting
purposes which could result in various items of Boston Capital's income, gain,
credit, loss and deduction being treated differently for tax and partnership
purposes than for accounting purposes. The tax code provides for optional
adjustments to the basis of Boston Capital's property for measuring both
depreciation and gain upon distributions of Boston Capital's property (Section
734) and transfers of Boston Capital's interests (including certificates)
(Section 743), provided that a Boston Capital election has been made pursuant to
Section 754. The general effect of such an election is that transferees of
Boston Capital's interests (including certificates) are treated, for purposes of
computing depreciation and gain, as though they had acquired a direct interest
in Boston Capital's assets, and Boston Capital is treated for such purposes,
upon certain distributions to partners (including
152
<Page>
investors), as though it had newly acquired an interest in Boston Capital's
assets and therefore acquired a new cost basis for such assets. A Section 754
election will not affect the amount of tax credits available to any partner (or
investor) or his transferee. Any such election, once made, is irrevocable
without the consent of the IRS. If Boston Associates does not agree to make such
an election, any benefits which might be available to the investors by reason of
such an adjustment to basis will be foreclosed. In addition, if the election is
not made, an investor may have greater difficulty in selling his certificates,
since a purchaser will obtain no current tax benefits from his investment to the
extent that such investment exceeds his allocable share of Boston Capital's
basis in its assets and since, upon a subsequent disposition of the property by
Boston Capital, such purchaser may be required to recognize taxable income to
the extent of such excess even though he does not realize any economic profit.
IRS AUDIT CONSIDERATIONS
(1) BOSTON CAPITAL TAX RETURNS AND AUDITS. The IRS may audit the information
returns filed by Boston Capital. Such an audit could result, among other things,
in the disallowance of certain deductions. In addition, it could possibly lead
to an audit of an investor's tax return with respect to non-Boston Capital
items.
The IRS has audited thirty-three limited partnerships with which affiliates of
Boston Associates are associated. Twenty-eight of these audits have now been
settled with the IRS without material change and five are still pending. None of
the limited partnerships invested in by Boston Capital have audits still
pending.
(2) AUDIT PROCEDURES FOR BOSTON CAPITAL AND OPERATING PARTNERSHIP TAX RETURNS.
The IRS is paying increased attention to the proper application of the tax laws
to limited partnerships. As a consequence, audits by the IRS of Boston Capital's
or operating partnerships' information returns have become more likely.
Investors should note that a federal income tax audit of Boston Capital's or an
operating partnership's tax information return may result in an audit of the
return of the investor, and that such an examination could result in adjustments
both to items that are related to Boston Capital and unrelated items. An audit
of Boston Capital's return will be a single proceeding at the Boston Capital
level. Boston Associates, as to Boston Capital, and an operating general
partner, as to each operating partnership, will be designated as the "tax
matters partner" and will have considerable authority to make decisions both
during the audit and in subsequent administrative and judicial proceedings that
could affect all investors. Moreover, Boston Associates, or the operating
general partner, as applicable, has the right to extend the statute of
limitations for all partners with respect to the assessment of tax involving
Boston Capital or operating partnership items, as applicable.
153
<Page>
(3) PENALTIES DUE TO SUBSTANTIAL UNDERSTATEMENT OF TAX LIABILITY. Section 6662
of the tax code imposes a penalty on a taxpayer when there is a "substantial
understatement of income tax" liability on the income tax return of such
taxpayer. For this purpose, an understatement is the excess of the amount of tax
required to be shown in the return over the amount of tax in fact reported on
the return. There is "substantial understatement of income tax" if the amount of
the total understatement on the income tax return for the taxable year
attributable to income, gain, loss, deduction or credit from all sources exceeds
the greater of (a) $5,000 ($10,000 for corporations) or (b) 10% of the tax
liability required to be shown on the return. The penalty does not apply to the
extent that the understatement is attributable to (a) an item if there is or was
"substantial authority" for the tax treatment of such item or (b) an item with
respect to which the relevant facts concerning the treatment of the item are
disclosed on the taxpayer's return.
Special rules apply, however, to items on the taxpayer's return that are
attributable to an investment in a "tax shelter" as that term is defined in
Section 6662 of the tax code ("Section 6662 Tax Shelter"). Section 6662 of the
tax code defines a tax shelter to mean a partnership or other entity (such as a
corporation or trust), an investment plan or arrangement, or any other plan or
arrangement if the principal purpose of the entity, plan, or arrangement, based
on objective evidence, is the avoidance or evasion of federal income tax. The
Regulations under Section 6662 state that the principal purpose of an entity,
plan, or arrangement is not the avoidance or evasion of federal income tax if
the entity, plan, or arrangement has as its purpose the claiming of exclusions
from income, accelerated deductions, or other tax benefits in a manner
consistent with congressional purpose. Because it is anticipated that the
principal items of tax benefit resulting from an investment in Boston Capital
will include tax credits, depreciation deductions and interest on the mortgage
indebtedness of the apartment complexes, which are specifically provided for by
Congress, it is reasonable to anticipate that Boston Capital will not be
considered to be a Section 6662 Tax Shelter. However, because such Regulations
are relatively recent and because the definition of a Section 6662 Tax Shelter
ultimately must be determined by judicial decisions, there still remains
considerable uncertainty concerning the meaning of the term. Thus, Counsel is
unable to predict the outcome if the question of whether Boston Capital is a
Section 6662 Tax Shelter were to be litigated.
If Boston Capital is determined to be a Section 6662 Tax Shelter, the penalty
under Section 6662 for a substantial understatement will not apply to the extent
that the understatement is attributable to an item if (a) there is or was
"substantial authority" for the treatment of the item, and (b) the taxpayer
reasonably believed that the tax treatment of such item was more likely than not
the proper treatment.
154
<Page>
The Secretary of the Treasury has promulgated regulations under Section 6662
that set forth his interpretation of the phrase "substantial authority," but
both because such regulations are relatively recent and because "substantial
authority" ultimately must be determined by judicial decisions, there still
remains considerable uncertainty concerning the meaning of that phrase. Thus, as
stated above, Counsel is unable to predict the outcome if the question of
whether there were substantial authority for certain material tax issues were to
be litigated, if Boston Capital or an operating partnership were determined to
be a Section 6662 Tax Shelter.
The penalty imposed by Section 6662 is equal to 20% of the amount of any
underpayment attributable to the understatement of tax (as reduced for items
described above), and it applies without regard to whether the taxpayer was
negligent or otherwise improperly prepared his return. The penalty is in
addition to any other penalties and any interest payable with respect to the
underpayment.
The IRS has the authority to waive all or any part of the penalty if there was
reasonable cause for the understatement and the taxpayer acted in good faith.
(4) PENALTIES DUE TO OVERSTATEMENT OF VALUE. Under Section 6662 of the tax code,
a penalty is imposed where the value of property, or the adjusted basis of
property, claimed on a return exceeds 200% of the amount determined to be the
correct value or adjusted basis, or if the price for services or property in
connection with transactions between certain affiliated entities is 200% or more
of the correct price. Boston Associates does not anticipate that the
determination of the value or adjusted basis of apartment complexes, or payment
for services, would give rise to such a penalty. However, there can be no
assurance that, for example, in the case of uncertainty in the allocation of
basis among personal property, depreciable real property improvements and
nondepreciable land, the IRS would not challenge the determination of the value
or adjusted basis of apartment complexes.
(5) INTEREST ON UNDERPAYMENT OF TAX. If it is finally determined that a taxpayer
has underpaid tax for any taxable year, the taxpayer must pay the amount of
underpayment, plus interest on the underpayment from the date the tax was
originally due. The interest rate is the federal short-term rate plus three
percentage points in the case of underpayments of tax, and the federal
short-term rate plus two percentage points in the case of overpayments.
LIMITATIONS FOR DEDUCTIONS ATTRIBUTABLE TO ACTIVITIES NOT ENGAGED IN
FOR PROFIT
Section 183 of the tax code provides limitations for deductions by individuals
and S Corporations attributable to "activities not engaged in for profit." The
155
<Page>
term "activities not engaged in for profit" means any activity other than one
that (a) constitutes a trade or business or (b) is engaged in for the production
or collection of income, or for the management, conservation, or maintenance of
property held for the production of income. The determination of whether an
activity is engaged in for profit is based on all the facts and circumstances.
Where income for an activity exceeds the deductions from the activity for at
least three out of five consecutive years, there is a presumption that the
activity is engaged in for profit.
The test for whether an activity is engaged in for profit is normally determined
at the partnership level. However, it is possible that each investor may have to
independently meet this test as well. Generally, an activity is engaged in for
profit if there is a bona fide objective of obtaining economic profit from the
activity. In determining whether this profit objective exists, the Regulations
under Section 183 list certain factors which, along with others, should normally
be taken into account, although the Regulations state that no one factor is
determinative. These factors include:
- - the manner in which the taxpayer carries on the activity;
- - the expertise of the taxpayer or his advisors;
- - the time and effort expended by the taxpayer in carrying on the activity;
- - the expectation that assets used in the activity may appreciate in value;
- - success of the taxpayer in carrying on other similar or dissimilar
activities;
- - the taxpayer's history of income or losses with respect to the activity;
- - the amount of profits, if any, which are earned;
- - the financial status of the taxpayer;
- - any elements of personal pleasure or recreation.
The IRS has published a Revenue Ruling holding that the construction and
operation of an apartment complex for low- and moderate-income housing under
Section 236 of the National Housing Act is not an activity to which Section 183
of the tax code applies. Consequently, the IRS has announced that it will not
assert the "not for profit" argument to any otherwise appropriate deductions.
Although few, if any, of the apartment complexes may be constructed or operated
under Section 236 of the National Housing Act, all of the apartment complexes
will constitute low or moderate income housing and will possess certain of the
other attributes which the Revenue Ruling recites as factors in the IRS's
decisions. To the extent that the IRS relied in its Revenue Ruling on Congress's
intention that availability of tax benefits be allowed to encourage investment
in apartment complexes providing decent housing for low or moderate income
families, similar considerations are involved here. The federal housing tax
credits were specifically
156
<Page>
enacted in the 1986 Tax Act. In addition, the IRS has recently issued
regulations which state that Section 183 will not be applied to Section 42.
Accordingly, Counsel is of the opinion that it is more probable than not that
Section 183 would not be applied to disallow deductions arising from the
ownership of the apartment complexes.
OVERALL EVALUATION OF TAX BENEFITS
Assuming that the investment objectives and acquisition policies of Boston
Capital are substantially realized as set forth in this Prospectus, including,
but not limited to the qualification for, and continuing compliance of the
apartment complexes with the requirements for, tax credits, Counsel is of the
opinion that it is more likely than not that the material tax benefits in the
aggregate (a significant majority) of a purchase of certificates will be
realized by qualified investors (i.e., individual investors whose adjusted gross
income does not exceed the limits for historic tax credits or who are not
subject to the alternative minimum tax).
Counsel's opinion with respect to the aggregate of the tax benefits to be
realized by a qualified investor is based upon, and assumes the continuing
applicability to an investment in Boston Capital of, existing federal income tax
law. Counsel's opinion assumes that the capital account balances (as that term
is defined in the Fund Agreement and the Operating Partnership Agreements) of
the partners are not significantly adjusted by reason of a termination of Boston
Capital or the operating partnerships or by reason of capital contributions
(such as, for example, unanticipated advances of capital from Boston Associates,
or working capital loans or operating deficit loans from the applicable
operating general partner(s), which may be deemed for federal income tax
purposes to be capital contributions), other than the capital contributions
provided for in Article V of the Fund Agreement and the corresponding section of
the Operating Partnership Agreements, and that in those instances where a
portion of the debt incurred by an operating partnership is recourse, that the
capital accounts are sufficient to allocate the losses to Boston Capital as
provided for in the applicable Operating Partnership Agreement. See "Federal
Income Tax Matters--Fund Allocations and Distributions," "--Federal Housing Tax
Credit" and "--Certain Other Tax Considerations-Alternative Minimum Tax."
CERTAIN OTHER TAX CONSIDERATIONS
Certain other provisions of the tax code should be considered by investors in
determining whether to purchase certificates.
(1) ALTERNATIVE MINIMUM TAX. Individuals and corporations, except for certain
qualifying small corporations, are subject to an alternative minimum tax
("AMT"). The AMT tax base is (a) regular taxable income, (b) increased by
certain preference items, including the amount by which a corporate taxpayer's
income for financial reporting purposes exceeds its AMT income,
157
<Page>
(c) adjusted for items requiring a substitute AMT method, such as depreciation
on real and personal property, and (d) reduced by an exemption amount of $58,000
for the married filing jointly category, $42,250 for a single return and $29,000
for the married filing separately category (phased out at the rate of $0.25
cents for each $1.00 that AMT income exceeds $150,000, $112,500 and $75,000,
respectively). Once AMT income is computed, a flat tax rate of 20% for
corporations and 26% for individuals with AMT income up to $175,000 and 28% on
amounts in excess of $175,000 is imposed that is payable to the extent it
exceeds the taxpayer's regular income tax liability.
Neither federal housing tax credits nor historic tax credits can be used to
offset alternative minimum tax. Taxpayers subject to the alternative minimum tax
may be limited in the amount of tax credits that can be used in a tax year. In
addition, taxpayers not otherwise subject to the alternative minimum tax
nonetheless may be limited as to the amount of tax credits which can be used in
a tax year. The maximum amount of tax credits that an investor can use in a tax
year may not exceed the difference between regular income tax liability and
tentative minimum tax. Tax credits that could not be utilized for the applicable
year may be carried back one year or forward twenty years (subject to
limitations on carry-backs for certain taxpayers).
For taxpayers subject to the alternative minimum tax, the primary adjustments
and preferences applicable to an investor are likely to be (1) the adjustment to
taxable income for depreciation on real property, using a forty-year life and
the straight-line method, and personal property, using the 150% declining
balance method, and (2) for corporations, the addition to taxable income of 75%
of the amount by which adjusted current earnings exceeds alternative minimum
taxable income.
(2) INTEREST ON DEBT RELATED TO PURCHASING OR CARRYING TAX EXEMPT OBLIGATIONS.
Section 265(a)(2) of the tax code disallows any deduction for interest paid by a
taxpayer on indebtedness incurred or continued for the purpose of purchasing or
carrying tax-exempt obligations. Boston Capital will not purchase or carry any
such obligations. However, such provision could apply to any investor who might
own or acquire tax-exempt obligations. The IRS has announced in a published
Revenue Procedure that the proscribed purpose will be deemed to exist with
respect to indebtedness incurred to finance a "portfolio investment." The
Revenue Procedure further states that, although a partnership's purpose in
incurring indebtedness will be attributed to its general partners, a limited
partnership interest will be regarded as a "portfolio investment." Therefore, in
the case of an investor owning tax-exempt obligations, the IRS might take the
position that his allocable portion of the interest paid by Boston Capital on
its borrowings or any interest paid by an investor in connection with the
purchase of certificates should be viewed as incurred to enable him to continue
carrying tax-exempt obligations, and that such investor should not be allowed to
deduct his full allocable share of such
158
<Page>
interest. The outcome of these issues would depend upon facts concerning each
investor, and Counsel will not render an opinion on this issue. An investor who
owns, or anticipates acquiring, tax-exempt obligations should consult with his
tax advisor as to the possible impact of Section 265(a)(2) of the tax code.
(3) CONSEQUENCES OF GIFT OR DEATH. Generally, no gain or loss is recognized for
income tax purposes as a result of a gift of property. Gifts of certificates may
be subject to a federal gift tax imposed pursuant to the rules generally
applicable to all gifts of property. A gift of certificates does not trigger
suspended passive losses or credits, and does not result in any recapture of
credits previously taken.
A gift of certificates may be treated as a sale of the certificates. For
purposes of computing gain or loss realized upon the gift, the amount realized
would include the donating investor's share of the nonrecourse liabilities from
which the investor is relieved. Consequently, an investor could recognize
taxable income as a result of making a gift of his interest.
In the event of the death of the owner of certificates, the fair market value of
the certificates as of the date of death (or as of the alternative valuation
date provided for in the federal estate tax law) will be included in the estate
of the owner for federal estate tax purposes. Generally, the owner's heirs will,
for federal income tax purposes, then take as their basis for the certificates
the same fair market values determined for federal estate tax purposes.
If the certificates have appreciated in value during the lifetime of the owner,
his heirs will have the benefit of this "stepped-up" basis when they sell or
otherwise dispose of the certificates.
(4) SUITABILITY OF AN INVESTMENT IN CERTIFICATES BY TAX-EXEMPT ENTITIES. It is
not likely that a tax-exempt entity would be able to utilize tax credits,
therefore an investment in certificates is not likely to be suitable for a
tax-exempt entity. However, if a tax-exempt entity has, and expects to continue
to have, unrelated business taxable income, tax credits could be used to offset
the federal tax on such income. See "Federal Income Tax Matters--Investment by
Tax-Exempt Entities."
(5) MINOR CHILDREN. Under the tax code, unearned income of a child under
fourteen years of age is taxed to the child at the parent's highest marginal tax
rate. The child is treated as a separate taxpayer from his parents and thus the
limitation on the use of tax credits to offset tax under the passive activity
rules of tax code Section 469 is determined with regard to the child's adjusted
gross income rather than the parent's adjusted gross income. Thus, if the
child's adjusted gross income does not exceed $200,000 (with respect to historic
tax credits only), tax credits generated by the ownership of certificates may be
used to reduce the child's taxes on up to $25,000 of income regardless of the
parent's annual adjusted gross income. However, the child
159
<Page>
will be subject to an alternative minimum tax on his unearned income equal to
the amount of alternative minimum tax that would have been imposed on his
parents had the child's unearned income been included in the parent's
alternative minimum taxable income.
(6) FOREIGN INVESTORS. The tax consequences of the purchase of certificates by a
foreign citizen or resident might differ significantly from those described in
this Prospectus. See "Suitability of an Investment in Certificates--Availability
and Applicability to Investors of Federal Income Tax Credits."
"TAX SHELTER" REGISTRATION
Section 6111 of the tax code requires persons who organize offerings classified
as "tax shelters" (a "Registration Tax Shelter") (as defined therein for
purposes of this requirement) to register them with the IRS. Boston Capital
has not yet received a Registration Tax Shelter identification number from the
IRS. When we do receive the Registration Tax Shelter number, we will provide
it to investors. Investors must include on their tax returns for the period
of time in which they are investors the Registration Tax Shelter number. In
addition, Boston Capital will be required to keep a list of investors' names
and addresses and must furnish such list to the IRS upon request. The IRS
Temporary and Proposed Regulations provide that the following disclosure
should be made:
ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT THIS INVESTMENT OR
THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY THE IRS.
Upon the sale or transfer of certificates, selling investors must provide the
purchaser with the tax shelter registration number (as well as the name, address
and taxpayer identification number) of Boston Capital, and inform the purchaser
that he must attach a Form 8271 to his tax return.
In addition, investors who transfer their certificates are required to maintain
a list of specific data concerning the purchaser (regarding his name, address,
date of purchase and taxpayer identification number) and inform the purchaser of
his similar obligation.
FUTURE FEDERAL INCOME TAX LEGISLATION AND REGULATIONS
Congress enacted comprehensive tax reform legislation in the 1986 Tax Act. No
assurance can be given that the current Congress or any future Congress will not
enact other federal income tax legislation that could adversely affect the tax
consequences of ownership of certificates, or that the Treasury Department will
not promulgate new regulations with similar adverse effects.
160
<Page>
ANY SUCH FUTURE LEGISLATION OR REGULATIONS ENACTED OR PROMULGATED AFTER THE
ISSUANCE OF THE LEGAL OPINIONS ANTICIPATED TO BE RENDERED IN CONNECTION WITH THE
ASSIGNMENT OF CERTIFICATES TO INVESTORS MAY AFFECT THE ABILITY OF COUNSEL TO
RENDER SUCH OPINIONS.
STATE AND LOCAL TAXES
In addition to the federal income tax consequences described above, investors
should also consider other potential state and local tax consequences of the
purchase of certificates, and should consult their tax advisor regarding state
and local tax consequences. Depending upon such factors as the state and local
residence or domicile of the investor and applicable state and local laws, tax
benefits that are available for federal income tax purposes may not be available
to investors for state or local income tax purposes and additional state and
local tax liabilities may be incurred. It is the responsibility of each investor
to satisfy himself as to the consequences of any state or local income tax or
other tax to which he is subject by reason of his participation in Boston
Capital.
Depending upon the state in which an investor resides and the location and
eligibility therefor of one or more apartment complexes, a state housing tax
credit may be available against the income tax payable in that state.
THE OFFERING
Boston Capital anticipates offering 7,000,000 certificates in two Series, namely
Series 47 and Series 48. Series 47 will consist of at least 250,000 certificates
and may consist of all certificates not already purchased by investors. The
minimum purchase for each investor is 500 certificates ($5,000), except that
employees of Boston Associates or its affiliates, and/or previous investors in
public limited partnerships sponsored by Boston Capital Corporation, may
purchase a minimum of 200 certificates ($2,000). Additional investments must be
made in multiples of 100 certificates ($1,000). There will be no sales to
discretionary accounts without the prior specific written approval of the
investor.
Series 47 will be offered first and Series 48 will begin after Series 47 is
finished. Series 47 will begin in January 2004 and is expected to continue
through June 30, 2004, but Series 47 could be concluded earlier or extended by
Boston Associates for an indefinite period of time, and is subject to the
condition that subscriptions for at least 250,000 certificates be accepted by
Boston Associates no later than twelve months from the commencement of each
series.
Subscription proceeds will be placed in an interest-bearing escrow account with
the escrow agent, and released to Boston Capital only on a closing date. Within
seventy-five days after the end of the fiscal quarter following a closing date,
subscribers who were admitted as investors will
161
<Page>
be paid interest accrued on their escrowed funds until the applicable closing
date. Subscriptions for certificates will be accepted or rejected by Boston
Associates, in its sole discretion, within thirty days of receipt, but the
issuance of certificates to an investor shall be subject to acceptance of
subscriptions for a sufficient number of certificates to effectuate a
closing. If not accepted or rejected within thirty days of receipt by Boston
Capital, any subscriptions shall be deemed to be accepted. Boston Capital
will refund all monies paid on rejected subscriptions within ten days of such
rejection without interest. Until subscriptions for at least 250,000
certificates in any series are received, no subscriber will be recognized as
an investor and funds paid by the subscribers will be deposited with the
escrow agent.
No certificates in any series will be sold unless Boston Associates receives and
accepts subscriptions for at least 250,000 certificates prior to the expiration
or termination of the applicable series offering period. If subscriptions for
fewer than 250,000 certificates have been received and accepted from qualified
investors by the expiration or termination of the applicable series offering
period, no certificates of such series will be sold and all funds received from
subscribers will be refunded within 10 days after the expiration or termination
of the applicable series offering period, together with accrued interest thereon
in the case of subscribers whose subscriptions have been accepted. If, prior to
the expiration or termination of the applicable series offering period, Boston
Associates has received and accepted subscriptions for at least 250,000
certificates in its sole discretion, Boston Associates may release the
subscription proceeds from escrow and the subscribers will be admitted as
investors (the "initial closing"). Any purchase of certificates by Boston
Associates and its affiliates and employees of its affiliates will not be
considered in order to meet the minimum offering of a particular series.
The date on which the initial closing takes place with respect to any series
pursuant to the foregoing provisions is referred to as an initial closing date.
After the initial closing and prior to the expiration or termination of the
applicable series offering period, Boston Associates may, but is not required
to, accept additional subscriptions for such series in excess of 250,000
certificates--up to the total of authorized certificates not already purchased
by investors and admit such subscribers as investors with subscription proceeds
being released from escrow and subscribers admitted as investors not later than
the last day of the calendar month following the date upon which their
subscriptions were accepted by the Boston Associates.
Boston Associates and its affiliates and employees of its affiliates may
purchase certificates aggregating not more than 15% of the certificates
authorized for sale in any series, excluding certificates which comprise any
part of the minimum offering of 250,000 certificates with respect to a
particular
162
<Page>
series; provided, however, that the affiliated persons must hold the
certificates for investment purposes only, and not for immediate resale. These
persons will acquire certificates on the same terms and conditions as other
investors, except they will not pay selling commissions, the Dealer-Manager Fee,
the non-accountable expense allowance, nor the accountable due diligence expense
reimbursement otherwise payable to the Dealer-Manager from Boston Capital. In
addition, investors will not have to pay selling commissions equal to 7% ($0.70)
per certificate, if they use the services of a NASD-registered investment
advisor that charges the investor a fee for its services. The net offering
proceeds to Boston Capital with respect to both kinds of purchases will be the
same as for certificates sold to other investors.
The offering amount of each series may be increased, in the sole discretion of
Boston Associates, up to the total amount of authorized but unissued
certificates at any time prior to the expiration or termination of the
applicable series offering period.
Boston Capital will account for, and issue information with respect to, each
series of certificates separately. Organization and offering expenses, Boston
Capital's working capital reserve and other general expenses of Boston Capital
may be allocated pro rata among the series based on the number of certificates
in each series.
To the extent that additional certificates are sold in additional series, each
such series may be required to reimburse prior series for its pro rata portion
of organization and offering expenses. All of Boston Capital's operating
expenses attributable to operating partnership interests allocated to a
particular series of certificates will be charged to that series. Boston
Associates will apportion operating expenses and other costs which are not
specifically allocable to a particular series among the appropriate series upon
the advice of its accountants. The allocations and distributions of profits,
credits and losses, net cash flow and sale, refinancing and liquidation
proceeds, and all other priorities and allocations set forth under "Sharing
Arrangements: Profits, Credits, Losses, Net Cash Flow and Residuals" will be
separately determined for each series of certificates. Voting rights with
respect to matters that are only applicable to a particular series of
certificates will be exercisable only by investors as to such series.
All series of certificates will:
- - have substantially identical investment objectives in generating tax credits,
and possibly state housing tax credits;
- - provide for no duplication of property management or other fees;
- - provide for substantially identical compensation to Boston Associates and its
affiliates;
163
<Page>
- - provide for investment in operating partnership interests under substantially
the same terms and conditions.
Additionally, operating partnership interests may be invested in jointly by
series of certificates, or may be invested in jointly by a series of
certificates with another similar offering, provided that (1) the two programs
have similar investment objectives, (2) there are no duplicate property
management or other fees, (3) the compensation to the sponsors of each program
is substantially similar, (4) each program will have a right of first refusal if
the other program wishes to sell its operating partnership interest and (5) the
investment of each program is on substantially the same terms and conditions.
There is a potential risk that investors in a series of certificates may not
acquire a controlling interest in a joint investment or, that if an equal
interest is acquired by each program, there may be a potential risk of impasse
on decisions.
THE CERTIFICATES OF DIFFERENT SERIES WILL SHARE IN DIFFERENT POOLS OF OPERATING
PARTNERSHIP INTERESTS AND, THEREFORE, INVESTORS IN DIFFERENT SERIES MIGHT
RECEIVE DIFFERENT RETURNS ON THEIR INVESTMENTS.
Because each series of Boston Capital will be treated as though it were a
separate partnership sharing in a separate and distinct pool of operating
partnership interests and because the purchase of certificates in any one series
will not entitle an investor to any interest in any other Series of Boston
Capital, historical financial information regarding Boston Capital, which is
comprised of prior Series, is not provided in this Prospectus. However,
information regarding the prior performance of each series within Boston Capital
and their affiliates is provided under the section of this Prospectus entitled
"Prior Performance of Boston Associates and its Affiliates" and "Appendix
I--Tabular Information Concerning Prior Limited Partnerships." In addition,
audited financial information regarding Boston Associates and the Assignor
Limited Partner is provided in Appendix I. Any investor may obtain a copy of
Boston Capital's most recent Form 10-K and/or Form 10-Q at no charge upon
written request to Boston Capital Tax Credit Fund V L.P., One Boston Place,
Suite 2100, Boston, Massachusetts 02108, Attention: Jeffrey Goldstein.
SELLING ARRANGEMENTS
The certificates are offered on a best efforts basis through Boston Capital
Services, Inc., the Dealer-Manager. The Dealer-Manager is an affiliate of Boston
Associates. The Dealer-Manager will receive as compensation selling commissions
of 7% of the public offering price of the certificates sold hereby ($0.70 per
certificate) except that for purchases of more than 10,000 certificates
($100,000), the selling commissions will be reduced as set forth in the table
below. The incremental reduction in selling commissions on purchases of more
than 10,000 certificates will not change
164
<Page>
Boston Capital's net proceeds, but will be reflected by a reduction in the price
per certificate on such purchases as set forth in the table below.
<Table>
<Caption>
NUMBER OF CERTIFICATES SELLING PRICE
PURCHASED COMMISSION PER CERTIFICATE
- ------------------------- ---------- ---------------
First 10,000 certificates 7.0% ($0.70 per certificate) $ 10.00
Next 10,000 certificates 6.5% ($0.65 per certificate) $ 9.95
Next 10,000 certificates 5.5% ($0.55 per certificate) $ 9.85
Next 10,000 certificates 4.5% ($0.45 per certificate) $ 9.75
Next 10,000 certificates 3.5% ($0.35 per certificate) $ 9.65
Next 10,000 certificates
and over 2.5% ($0.25 per certificate) $ 9.55
</Table>
Reductions apply in a graduated manner, i.e., for purchases above 10,000
certificates, selling commissions of $0.70 per certificate will nonetheless be
payable on the first 10,000 certificates purchased and, thereafter, $0.65 per
certificate will be payable on each certificate purchased from 10,100 to 20,000
certificates, $0.55 per certificate will be payable on each certificate
purchased from 20,100 to 30,000, $0.45 per certificate will be payable on each
certificate purchased from 30,100 to 40,000, $0.35 per certificate will be
payable on each certificate purchased from 40,100 to 50,000 and $0.25 per
certificate will be payable on each certificate purchased in excess of 50,100.
In order to purchase certificates, the subscriber must complete and properly
execute, or, to the extent permitted by applicable state law, have completed and
executed on his behalf by the Dealer-Manager or Soliciting Dealer, the Investor
Form attached hereto. Each subscription for certificates must be accompanied by
tender of the sum of $10 (less any applicable quantity discount) per certificate
($8.95 in the case of Boston Associates, its affiliates and employees of its
affiliates). By executing the Investor Form, or agreeing to have the Investor
Form executed on his behalf, the subscriber agrees to be bound by all the terms
of the Fund Agreement, which is set forth in full as Exhibit A. Provisions of
the Fund Agreement are summarized under the caption "Summary of Provisions of
the Fund Agreement."
The Dealer-Manager also will receive (1) a non-accountable expense allowance in
an amount up to 1% of the public offering price of the certificates sold, (2)
an accountable expense reimbursement in an amount up to 0.5% of the public
offering price of the certificates sold and (3) a Dealer-Manager Fee in an
amount equal to 2% of the public offering price of the certificates sold, the
aggregate of which will be utilized for wholesaling expenses including
reallowances.
Subject to the satisfactory completion of any regulatory reviews and
examinations which may be required, the rules of the NASD and approval by the
Dealer-Manager, the Dealer-Manager may establish sales incentive programs for
registered representatives of Soliciting Dealers or may reimburse the Soliciting
Dealers for sales incentive programs established by them. Sales
165
<Page>
incentives will be deemed to be additional underwriting compensation. The
aggregate value of incentives paid directly to individual registered
representatives will not exceed $100.00. The Soliciting Dealers will have
sole discretion as to how they will distribute sales incentives to their
respective registered representatives. The value of any sales incentives will
be included in total underwriting compensation subject to the limitations set
forth herein. The Dealer-Manager may also pay cash compensation directly to
the Soliciting Dealers with such payments to be reflected on the books of
those Soliciting Dealers as compensation in connection with the offering.
Investors who have engaged the services of a registered investment advisor may
agree with the participating Soliciting Dealer selling the certificates and the
Dealer-Manager to reduce the amount of selling commissions payable with respect
to such sale to as low as zero. The net offering proceeds to Boston Capital will
not be affected by such reduction and all such sales must still be made through
Soliciting Dealers. Neither Boston Associates, the Dealer-Manager or its
affiliates will directly or indirectly compensate any person engaged as an
investment advisor by a potential investor as an inducement for such investment
advisor to recommend an investment in Boston Capital.
At the sole discretion of each Soliciting Dealer, the Soliciting Dealers and
their employees may purchase certificates aggregating not more than 10% of the
certificates authorized for sale in any series on the same terms and conditions
as other investors, except they will not pay that portion of any Selling
Commissions which may otherwise be re-allowed to the Soliciting Dealer by the
Dealer-Manager. The net offering proceeds to Boston Capital of each such sale,
however, will be the same as for the certificates sold to the public. Any
purchases of certificates by Soliciting Dealers and their employees will not be
considered in order to meet the minimum offering of a particular series.
The Dealer-Manager may re-allow a portion of the 7% Selling Commissions and
the 1% non-accountable expense allowance to Soliciting Dealers in respect of
any certificates sold through such Soliciting Dealer's efforts. Soliciting
Dealers may elect to pay their registered representatives any re-allowed
selling commissions over a period of up to seven years. None of the 0.5%
accountable due diligence expense reimbursement will be paid to the
Dealer-Manager or its affiliates, but will be paid to the Soliciting Dealers.
Unused amounts from the 0.5% accountable due diligence expense reimbursement
will be used to purchase operating partnership interests. The aggregate
compensation to be paid to the Dealer- Manager and Soliciting Dealers from
whatever source and at all levels of sales will not exceed 10% of the
offering proceeds plus a maximum of one-half of one percent for bona fide due
diligence expenses.
166
<Page>
The agreement entered into by Boston Capital and Boston Associates with the
Dealer-Manager and the selling agreements between the Dealer-Manager and
Soliciting Dealers will contain cross-indemnity clauses for the benefit of
the Soliciting Dealers with respect to certain liabilities, including
liabilities under the Securities Act of 1933, as amended. The Dealer-Manager and
the Soliciting Dealers may be deemed underwriters as that term is defined in the
Securities Act of 1933, as amended.
ESCROW ARRANGEMENTS
All proceeds of the offering will be deposited and held in trust for the benefit
of the purchasers of certificates in an escrow account or accounts with the
Escrow Agent to be used only for the specific purposes set forth under
"Estimated Use of Proceeds." These proceeds may be temporarily invested in bank
time deposits, certificates of deposit, bank money market accounts and
government securities. Subscription proceeds deposited may not be withdrawn by
subscribers. An investor should make the subscription check payable to
"Wainwright Bank & Trust/BCTC V Escrow Account."
Upon recognition as an investor, a subscriber for certificates will be entitled
to receive an amount equal to the amount of the interest earned on his
subscription proceeds held in the escrow account from the day after such
proceeds were received in the escrow account until but not including the closing
date. Such distribution will be made within seventy-five days of the end of the
fiscal quarter following the closing date, and will be made prior to, and
without regard to, any distributions from Boston Capital to which the investors
are entitled as described under "Sharing Arrangements: Profits, Credits, Losses,
Net Cash Flow and Residuals."
SUMMARY OF PROVISIONS OF THE FUND AGREEMENT
By tendering payment for certificates and by acceptance of the confirmation of
purchase or delivery of the certificate, an investor shall be deemed to have
assented to be bound by all the terms and conditions of the Fund Agreement, the
form of which is set out in its entirety at the end of this Prospectus as
Exhibit A. The investors will become Assignees of the Assignor Limited Partner
of Boston Capital and as such, their rights will also be governed by the terms
of the Fund Agreement. An investor executing an Investor Form shall have
assented to be bound by all the terms and conditions of the Fund Agreement.
Prospective investors should study the form of Fund Agreement carefully before
subscribing for certificates. The following statements and the statements in
this Prospectus concerning the Fund Agreement and related matters are merely a
summary, do not purport to be complete and in no way modify or amend, and are
qualified in their entirety by reference to the Fund Agreement.
167
<Page>
WITHDRAWAL OF BOSTON ASSOCIATES
Subject to the consent of a majority in interest of the limited partners
including the Assignor Limited Partner, voting as instructed by a majority
in interest of the investors, Boston Associates may withdraw or sell, transfer
or assign its interest upon giving sixty days notice to the limited partners of
its intention to withdraw upon admission of a substitute general partner, who
has satisfied certain conditions, including, among other things, that:
(1) such person agrees to and executes the Fund Agreement;
(2) Counsel or counsel for the investors renders an opinion that such person's
selection and admission is in accordance with the Delaware Revised Uniform
Limited Partnership Act;
(3) that such person has sufficient net worth and meets all other requirements
of the IRS necessary for Boston Capital to continue to be classified as a
partnership for federal income tax purposes; provided that the interests of
the investors are not adversely affected.
Subject to Section 6.02 of the Fund Agreement, Boston Associates may designate
additional persons to be general partners, whose interests shall be such as
shall be agreed upon by Boston Associates and such additional general partners,
provided that the interests of the investors shall not be adversely affected.
REMOVAL OF BOSTON ASSOCIATES
A majority in interest of the limited partners, including the Assignor Limited
Partner, voting as instructed by the investors, is entitled to remove Boston
Associates from Boston Capital and elect a new general partner.
Upon the removal of Boston Associates, any rights--including, but not limited
to, rights to its Fund Interest and fees--or liabilities of Boston Associates
which matured prior to such removal will not be affected. See "Voting Rights and
Meetings."
LIABILITY OF PARTNERS AND INVESTORS TO THIRD PARTIES
Boston Associates will be liable for all general obligations of Boston Capital
to the extent not paid by Boston Capital. Boston Associates will not be liable
for any nonrecourse obligations of Boston Capital contracted for with third
parties.
No limited partner or investor is personally liable for the debts, liabilities,
contracts or any other obligations of Boston Capital; a limited partner and
investor shall only be liable to pay his capital contribution as and when due,
unless, in addition to the exercise of his rights and powers as a limited
partner or investor, he takes part in the control of the business of Boston
Capital. However, the Delaware Revised Uniform
168
<Page>
Partnership Act provides that if a limited partner receives a distribution
from Boston Capital at the time that such distribution was in violation of
Section 17-607(a) of the Act or the Fund Agreement, then that limited partner
shall be liable to Boston Capital for the amount of such distribution for a
period of three years from the date of such distribution. A distribution in
violation of Section 17-607(a) of the Act is a distribution where, after
giving effect to the distribution, all liabilities of Boston Capital other
than liabilities to limited partners on account of their interests, and
nonrecourse liabilities, exceed the fair value of Boston Capital's assets,
excluding that portion of the fair value subject to nonrecourse liability. It
is expected that similar liabilities would be applicable to investors.
WITHDRAWAL OF CAPITAL AND REDEMPTION OF INVESTORS' INTEREST
Each investor may look solely to the assets of Boston Capital or the assets of
Boston Capital attributable to his series of certificates, as the case may be,
for any distributions, and will have no recourse against any other investor or
any limited partner of Boston Capital. No limited partner or investor has the
right to request withdrawal of his capital from Boston Capital, and as set forth
in Section 3.04(b) of the Fund Agreement, Boston Associates has no personal
liability for the repayment of such capital. No partner or investor is entitled
to demand or receive any return of his capital contribution other than from
liquidation, sale or refinancing proceeds, to the extent available, as provided
in the Fund Agreement; nor is any limited partner or investor entitled to
receive property other than cash upon dissolution and termination of Boston
Capital. Boston Capital does not intend to purchase or redeem the interests of
limited partners or investors. Nothing described above alters the limitation on
liability of Boston Associates or its affiliates pursuant to Section 5.08(a) of
the Fund Agreement.
MANAGEMENT OF BOSTON CAPITAL
Boston Associates has the sole right to manage the business of Boston Capital.
MERGERS AND ROLLUPS
Section 10.02(h) of the Fund Agreement prohibits the merger or combination of
Boston Capital with any other entity.
VOTING RIGHTS AND MEETINGS
Investors have no right to participate in the management or control of Boston
Capital's business. The Fund Agreement provides, however, that the Assignor
Limited Partner will vote its limited partnership interest as directed by the
investors. Accordingly, the limited partners, including the Assignor Limited
Partner voting on behalf of and as instructed by the investors, owning a
majority in interest of the total interests of Boston Capital will have the
right to vote to:
- - approve or disapprove the sale of all or substantially all of the assets of
Boston Capital at any one time; provided, however, only investors in a
169
<Page>
particular series will have the right to vote on the sale of operating
partnership interests attributable to that series;
- - amend the Fund Agreement, except that, without the approval of any limited
partner affected thereby, no such amendment may (1) alter the rights and
obligations of such limited partner under the Fund Agreement, (2) modify the
order of distributions of cash or allocations of profits, credits and losses
to such limited partner, (3) or modify the method of determining
distributions of cash and allocations of profits, credits and losses to such
limited partner and (4) without the consent of all limited partners and
investors, no such amendment may allow the investors to take part in the
management or control of Boston Capital's business or otherwise modify their
limited liability;
- - remove a general partner and elect a replacement;
- - dissolve Boston Capital.
Notwithstanding the foregoing, Boston Associates may amend the Fund Agreement
without the consent of the limited partners with respect to certain matters
which are not adverse to the interests of the investors. Boston Associates may
at any time call a meeting of investors or call for a vote without a meeting of
the investors. See Section 12.02 of the Fund Agreement.
Under the Delaware Revised Uniform Limited Partnership Act, limited partners may
not take part in the control of the business of a partnership. Under Delaware
law presently applicable, a limited partner will not be deemed to be taking part
in the control of the business by voting on one or more of the following
matters: (1) sale of all or substantially all of the assets of Boston Capital,
(2) amendment to the partnership agreement, (3) change in the nature of its
business, (4) removal of a general partner, (5) dissolution of the partnership
and (6) admission of a general or a limited partner.
There will be no annual or other periodic meetings of the investors. However,
Boston Associates must call meetings of the investors for any purpose upon
written request of limited partners, including the Assignor Limited Partner
voting on behalf of and as instructed by the investors, owning in the aggregate
10% or more in interests. In addition, Boston Associates shall, upon written
request of limited partners owning in the aggregate 10% or more in interests,
submit any matter upon which they are entitled to vote to the limited partners
and investors for a vote without a meeting. The Assignor Limited Partner will
call for a meeting or a vote if so instructed by the investors holding the
requisite percentage of interests. With respect to matters applicable to any
particular series of certificates, the above-described provisions will be
applicable only to investors in such series.
Unlike shareholders of a corporation, limited partners, including the Assignor
Limited Partner acting on behalf of the investors, will not have
170
<Page>
any appraisal or dissenters' rights in the event that the Fund Agreement is
amended against their wishes.
AMENDMENTS TO THE FUND AGREEMENT
In addition to amendments to the Fund Agreement approved by a majority in
interest of the limited partners, including the Assignor Limited Partner acting
on behalf of the investors described above, Boston Associates may amend the Fund
Agreement without the consent of the limited partners or investors to:
- - add or substitute general partners and limited partners if such addition or
substitution is in compliance with the provisions of the Fund Agreement;
- - add to the general partners' representations, duties or obligations or to
surrender any right or power granted to them;
- - cure any ambiguity in or correct or supplement any provision that may be
inconsistent with the manifest intent of the Fund Agreement or the
administrative efficiency of Boston Capital;
- - comply with the requirements of the staff of the Securities and Exchange
Commission, any state securities commission, any national securities exchange
or NASDAQ.
None of the foregoing amendments may be adverse to the interests of the limited
partners or investors.
DISSOLUTION AND LIQUIDATION
Boston Capital shall continue in full force and effect until December 31, 2053,
or until dissolution or adjudication of incompetence of a sole general partner,
the passing of ninety days after the sale of all of the apartment complexes or
operating partnership interests, as applicable, or until such time as is
reasonably needed to wind up Boston Capital's affairs, the election by a
majority in interest of the limited partners, including the Assignor Limited
Partner voting on behalf of and as instructed by the investors to dissolve
Boston Capital or the occurrence of any other event causing dissolution of
Boston Capital under the laws of the State of Delaware. Boston Capital would
also be dissolved upon the removal or withdrawal of Boston Associates, unless
Boston Associates has been or is to be replaced by a substitute general partner
designated by a vote of the beneficiaries including the Assignor Limited Partner
voting as instructed by the investors.
In the event of the occurrence of the bankruptcy, death, dissolution,
withdrawal, removal or adjudication of incompetence of Boston Associates, and
unless it is decided by vote of a majority in interest of the limited partners,
including the Assignor Limited Partner voting as instructed by the investors, to
continue Boston Capital and designate a successor general partner, the
171
<Page>
liquidator shall liquidate Boston Capital's assets and distribute its proceeds
in accordance with the priorities set forth in the Fund Agreement.
TAX ELECTION
Upon a transfer of one or more certificates or limited partnership interests by
the investors, Boston Capital is authorized, but does not intend, to make the
election provided for under Section 754 of the tax code to adjust the basis of
Boston Capital's property.
TAX MATTERS PARTNER DESIGNATION
Pursuant to Section 6231 of the tax code and its regulations and Section 9.06 of
the Fund Agreement, Boston Associates shall designate itself as the tax matters
partner for purposes of federal income tax audits of Boston Capital income,
gain, loss, deduction or credit.
BOOKS AND RECORDS
Boston Capital's fiscal year begins April 1 of each year.
Boston Capital will use the accrual method of accounting.
Boston Capital's books and records shall include information relating to the
status of each apartment complex, information with respect to any sales of goods
or services by Boston Associates or its affiliates to Boston Capital, and a list
of the names and addresses of all limited partners and investors.
Boston Capital's books and records shall be maintained at the office located at
One Boston Place, Suite 2100, Boston, Massachusetts 02108. Such books and
records shall be available there for examination by any limited partner or
investor, or his duly authorized representative, at any and all reasonable
times. Any limited partner or investor, or his duly authorized representative,
shall, upon paying the costs of duplication and mailing, be entitled to a copy
of audited financial statements of operating partnership(s) as soon as
practicable after receipt thereof from the operating partnership(s) and of the
most recently available list of the names and addresses of the limited partners
and investors.
SUCCESSOR IN INTEREST
The provisions of the Fund Agreement are binding upon the limited partners and
investors, and are binding upon and inure to the benefit of their heirs,
executors, administrators, successors and assigns.
POWER OF ATTORNEY
Each investor, by acquiring certificates, irrevocably appoints and empowers
Boston Associates as its attorney-in-fact to execute, acknowledge and swear to
all instruments and file all documents requisite to carrying out the intention
and purpose of the Fund Agreement.
172
<Page>
APPLICABLE LAW
The Fund Agreement shall be construed and enforced in accordance with the laws
of the State of Delaware; provided, however, that causes of action for
violations of federal or state securities laws shall be governed by federal
securities laws or the laws of the appropriate state, as applicable.
SALES LITERATURE
In connection with this offering made hereby, the Dealer-Manager and Soliciting
Dealers may make use of a brochure entitled "Boston Capital Tax Credit Fund V"
and prepared by Boston Capital, which describes certain aspects of Boston
Capital, Boston Associates and its affiliates. In certain jurisdictions such
supplemental material may not be available. The offering of certificates will be
made only by means of this Prospectus. Although the information contained in the
sales material will be consistent with the information contained in this
Prospectus, such information will not purport to be complete. Any such sales
material will not be part of this Prospectus and it should be read only in
conjunction with this Prospectus.
EXPERTS
The financial statements of the Assignor Limited Partner and Boston Associates
included in this Prospectus have been included in reliance on the reports of
Reznick Fedder & Silverman, independent certified public accountants, given on
the authority of the firm as experts in auditing and accounting.
The statements under the heading "Federal Income Tax Matters" have been reviewed
by Nixon Peabody LLP in Washington, D.C., and have been included herein, to the
extent such statements constitute matters of law, in reliance upon the authority
of the firm as an expert thereon.
INVESTOR REPORTS
Financial information contained in all reports to investors will be prepared on
the accrual basis of accounting in accordance with generally accepted accounting
principles and will include, where applicable, a reconciliation to information
furnished to investors for income tax purposes--such income tax information will
be on the cash basis. The balance sheet, income statement and certain other
financial information in the annual report of Boston Capital will contain an
opinion of independent certified public accountants and will be furnished to
investors within 120 days following the close of each fiscal year. The annual
report will contain a complete statement of compensation and fees paid by Boston
Capital to Boston Associates and its affiliates, together with a description of
any new agreements with affiliates. The annual report will also summarize Boston
Capital's activities during the year.
Boston Capital's fiscal year will end on March 31 each year. Tax information
will be provided to the investors within seventy-five days following the close
of each calendar year. Boston Capital will distribute to the
173
<Page>
investors, (1) within forty-five days after the end of each of the first three
fiscal quarters of each year, unaudited quarterly financial information with
respect to Boston Capital, together with a summary report of its quarterly
operations and (2) within 120 days after the end of the fourth fiscal quarter of
each year, audited financial information with respect to Boston Capital and a
statement of the services rendered to Boston Capital by Boston Associates and
its affiliates and the payments by Boston Capital to them of fees and other
compensation, reimbursed expenses and other cash distributions during such
fiscal period, and until all operating partnership interests have been acquired,
a description of any new operating partnership interests and the related
apartment complexes, other than those, if any, described in this Prospectus
acquired during the fiscal period.
All reports will set forth required information for each series separately to
the extent applicable.
LEGAL MATTERS
Legal matters in connection with the offering of the certificates will be passed
upon by Nixon Peabody LLP, 401 9th Street, N.W., Suite 900, Washington, D.C
20004, as counsel to Boston Capital. In addition, Nixon Peabody LLP in
Washington, D.C. prepared the description of federal income tax consequences
under the caption "Federal Income Tax Matters."
REGISTRATION STATEMENT
A Registration Statement under the Securities Act of 1933 has been filed with
the Securities and Exchange Commission, Washington, D.C. with respect to these
securities offered. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information pertaining to the securities offered hereby, reference is made to
the Registration Statement, including the exhibits filed as a part thereof.
This Prospectus contains a fair summary of the material terms of all of the
exhibits to the Registration Statement and the documents referred to herein.
Boston Capital has not knowingly made any untrue statement of a material fact or
omitted to state any fact required to be stated in the Registration Statement,
including this Prospectus, or necessary to make the statements therein not
misleading.
GLOSSARY
Additional definitions of terms can be found in Article II of the Fund
Agreement.
"ACQUISITION FEE" means the total of all fees and commissions paid by any party
in connection with Boston Capital's acquisition of operating
174
<Page>
partnership interests, including the Asset Acquisition Fee, and in connection
with the operating partnerships' acquisition of apartment complexes, but
excluding a development fee paid to a person who is not an affiliate of Boston
Associates in connection with the actual development of an apartment complex by
an operating partnership. Included in the computation of such fees or
commissions shall be any real estate fee, selection fee, development fee,
nonrecurring management fee or any fee of a similar nature, however designated.
For the purposes of this definition, development fee shall mean a fee for
packaging of an apartment complex, including negotiating and approving plans,
and undertaking to assist in obtaining zoning and necessary variances and
necessary financing for a specific apartment complex, either initially or at a
later date.
"AFFILIATE" means, when used with respect to a specified person, (1) any person
that directly or indirectly controls or is controlled by or is under common
control with the specified person, (2) any person that is an officer of,
director of, partner in or trustee of, or serves in a similar capacity with
respect to, the specified person or of which the specified person is an officer,
director, partner or trustee, or with respect to which the specified person
serves in a similar capacity, (3) any person that, directly or indirectly, is
the beneficial owner of 10% or more of any class of equity securities of the
specified person or of which the specified person is directly or indirectly the
owner of 10% or more of any class of equity securities, (4) any person who is an
officer, director, general partner, trustee or holder of 10% or more of the
voting securities or beneficial interests of any of the foregoing or (5) any
person treated as a controlling person for purposes of Section V.E.1(a) of the
NASAA Guidelines. For purposes of this definition, the term "Affiliate" shall
not be deemed to include any law firm (or member or associate thereof) providing
legal services to Boston Capital, Boston Associates or any affiliate of any of
them.
"BOSTON ASSOCIATES" means Boston Capital Associates V L.L.C., a Delaware
limited liability company, in its capacity as the general partner of Boston
Capital.
"BOSTON CAPITAL" means the limited partnership formed as of
October 15, 2003, under the Delaware Revised Uniform Limited Partnership Act and
known as Boston Capital Tax Credit Fund V L.P.
"CAPITAL ACCOUNT" means a separate account maintained and adjusted (1) for each
Limited Partner and the separate subaccount of the capital account of the
Assignor Limited Partner maintained and adjusted for each investor in accordance
with the terms of the Fund Agreement, and (2) for each partner of an operating
partnership in accordance with the terms of the applicable Operating Partnership
Agreement.
175
<Page>
"CAPITAL TRANSACTION" means: (1) the sale by Boston Capital of all or part of
its interest in an operating partnership, or any other transaction affecting
Boston Capital, including its receipt of its share of the proceeds of a
capital transaction as to an operating partnership, which is not in the
ordinary course of its business, and (2) with respect to an operating
partnership, any transaction the proceeds of which are not includable in
determining net cash flow of the operating partnership, including, without
limitation, the sale or other disposition of all or substantially all the
assets of such operating partnership and any refinancing of the applicable
permanent mortgage loan, but excluding the payment to the operating
partnership of capital contributions.
"DEALER-MANAGER" means Boston Capital Services, Inc. ("BCS"), a Massachusetts
corporation which is an affiliate of Boston Associates.
"ESCROW AGENT" means Wainwright Bank & Trust Company, Boston, Massachusetts, in
its capacity as such.
"FRONT END FEES" means fees and expenses paid by any party for any services
rendered during and in connection with Boston Capital's organizational or
acquisition phase, including other Acquisition Fees, Organization and Offering
Expenses, plus Selling Commissions and any other similar fees, although none are
anticipated, however, designated by Boston Associates. For purposes of this
definition "Acquisition Fees" means the total of all fees and commissions paid
by any party in connection with Boston Capital's acquisition of operating
partnership interests (including the Asset Acquisition Fee, payable by Boston
Capital from Gross Proceeds to Boston Associates or its affiliate(s) pursuant to
Section 5.15 of the Fund Agreement) and in connection with the operating
partnerships' acquisition of apartment complexes, but excluding development fees
paid to persons who are not affiliates of Boston Associates in connection with
the actual development of apartment complexes by operating partnerships.
Included in the computation of such fees or commissions shall be any real estate
fee, selection fee, nonrecurring management fee or any fee of a similar nature,
however designated. For purposes of this definition, "Acquisition Expenses"
means the total of all legal fees and expenses, travel and communication
expenses in connection with the negotiations, costs of real estate consultants
and appraisals, engineering and market studies, accountants' fees, title and
recording fees and miscellaneous expenses associated with Boston Capital's
acquisition of operating partnership interests and the operating partnerships'
acquisition of apartment complexes, whether or not acquired, including any
expenses that may have been paid by an operating general partner that will be
reimbursed by Boston Capital or included in the purchase price of the apartment
complexes or operating partnership interests, to the extent such expenses are
not includable in Boston Capital's tax credit basis with respect to that
apartment complex.
176
<Page>
"INTEREST" or "FUND INTEREST" means the entire ownership interest of a
limited partner in Boston Capital at any particular time, including the right
of such limited partner to any and all benefits to which a limited partner
may be entitled under the Fund Agreement and the Act, together with the
obligations of such limited partner to comply with all the terms and
provisions of the Fund Agreement. Reference to a majority, or specified
percentage, in interest of the limited partners means (subject to the
provisions of Section 12.11 of the Fund Agreement with respect to matters
applicable to any particular series of certificates) limited partners whose
combined capital contributions represent over 50%, or such specified
percentage, respectively, of the capital contributions of all limited
partners (the Assignor Limited Partner will vote Fund Interests on behalf of
and in accordance with the written directions of the investors). The term
"Interest" may also mean the beneficial interest of an investor in the Fund
Interest of the Assignor Limited Partner, if the context so requires. As the
context may require, the term "Interest" may also mean the limited
partnership interest of Boston Capital in an operating partnership.
"LIQUIDATION, SALE OR REFINANCING PROCEEDS" means (a) as to an operating
partnership: (i) the gross proceeds resulting from (A) the liquidation of
operating partnership assets, (B) the gross proceeds resulting from any sale of
the applicable apartment complex or refinancing of the applicable permanent
mortgage loan, and/or (C) any other capital transaction, less (ii) the expenses
of the operating partnership incident to such capital transaction (including in
the case of a refinancing the cost of retiring any existing mortgage or other
secured indebtedness), before any application or distribution of such proceeds
pursuant to the Operating Partnership Agreement and (b) as to Boston Capital:
(i) the gross proceeds (A) resulting from the liquidation of Boston Capital's
assets, (B) received by Boston Capital from an operating partnership as a result
of the occurrence of a capital transaction as to such Operating Partnership, (C)
resulting from any sale of the interest of the Boston Capital in any Operating
Partnership, and/or (D) resulting from any other capital transaction, less (ii),
in the case of (A), (C) and (D) immediately above, the expenses of Boston
Capital incident to such capital transaction, before any application or
distribution of such proceeds pursuant to the Fund Agreement.
"NASAA GUIDELINES" means the Statement of Policy Regarding Real Estate Programs
adopted by the North American Securities Administrators Association, Inc., as in
effect on the date of the Prospectus.
"NET CASH FLOW" means, with respect to any year or other applicable period,
(a) all revenues received by Boston Capital during such period, plus (b) any
amounts which Boston Associates releases from the Working Capital Reserve
(other than amounts placed in the Working Capital Reserve from Net Offering
Proceeds) as being no longer necessary to hold as part of the Working Capital
Reserve, less: (i) operating expenses of
177
<Page>
Boston Capital paid from revenues during the period, including any expenses
paid to Boston Associates, but not including such amounts paid from the
Working Capital Reserve, (ii) all cash payments made from revenues of Boston
Capital during such period to discharge Fund indebtedness, and (iii) all
amounts from revenues, if any, added to the Working Capital Reserve during
such period.
"NET OFFERING PROCEEDS" means the total amount of funds received by Boston
Capital. on behalf of the Assignor Limited Partner from the investors in
connection with the offering, exclusive of Selling Commissions, as described in
"The Offering-Selling Arrangements."
"ORGANIZATION AND OFFERING EXPENSES" means (a) an accountable due diligence
expense reimbursement to the Dealer-Manager in an amount up to $.05 per
certificate sold, (b) the Dealer-Manager Fee to the Dealer-Manager, (c) a non
accountable expense allowance to the Dealer-Manager in an amount up to $.10 per
certificate sold, (d) an accountable expense reimbursement to Boston Associates
and its affiliates, and (e) accountable expenses paid by Boston Capital directly
or by Boston Associates and affiliates in connection with the organization of
Boston Capital, the structuring of Boston Capital's investments and the offering
of certificates, as more specifically described under the caption "Compensation
and Fees--Organization, Offering and Acquisition Phase."
"REGULATORY AGREEMENT" means an agreement entered into between an operating
partnership and a federal, state or local agency or unit of general local
government, which agreement sets forth certain terms under which the applicable
apartment complex is to be developed and/or operated.
"SALES PREPARATION FEE" means the fee payable by an operating partnership to an
operating general partner for its services in preparing an apartment complex for
sale, in an amount anticipated to be 3% of the gross sales price of the
apartment complex.
"WORKING CAPITAL RESERVE" means funds of Boston Capital held in reserve,
anticipated to be initially established in an amount of 4% of gross offering
proceeds, to be available for contingencies relating to the operation,
management and administration of the apartment complexes, the operating
partnerships, and Boston Capital, including the payment of the annual Fund
Management Fee. In addition, funds held in the Working Capital Reserve will also
be available for option and/or other payments which may be necessary to secure
the acquisition of operating partnership interests. Amounts held in the Working
Capital Reserve may at any time, in the discretion of Boston Associates, be
added to net cash flow or liquidation, sale or refinancing proceeds.
178
<Page>
REZNICK FEDDER & SILVERMAN
CERTIFIED PUBLIC ACCOUNTS - A PROFESSIONAL CORPORATION
7700 OLD GEORGETOWN ROAD, SUITE 400, BETHESDA, MARYLAND 20814-6224
PHONE (301) 652-9100, FAX (301) 652-1848
www.rfs.com
INDEPENDENT AUDITORS' REPORT
To the Members of
Boston Capital Associates V L.L.C.
We have audited the accompanying balance sheet of Boston Capital Associates V
L.L.C. as of October 21, 2003. This balance sheet is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Boston Capital Associates V
L.L.C. as of October 21, 2003, in conformity with accounting principles
generally accepted in the United States of America.
REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
October 21, 2003
I-1
<Page>
BOSTON CAPITAL ASSOCIATES V L.L.C.
BALANCE SHEET
October 21, 2003
ASSETS
Cash and cash equivalents $1,000,000
Investment in limited partnership (note C) --
----------
$1,000,000
==========
Members' capital (note B)
Managing member $ 500,000
Other member 500,000
----------
1,000,000
----------
$1,000,000
==========
The accompanying notes are an integral part of this balance sheet.
I-2
<Page>
BOSTON CAPITAL ASSOCIATES V L.L.C.
NOTES TO BALANCE SHEET
October 21, 2003
NOTE A--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Boston Capital Associates V L.L.C. (the "Company") was organized under the
laws of the State of Delaware as of October 15, 2003, to act as the general
partner of, and to acquire and hold a general partnership interest in, Boston
Capital Tax Credit Fund V L.P.
INVESTMENT IN LIMITED PARTNERSHIP
The Company accounts for its investment in Boston Capital Tax Credit Fund V
L.P. (the "Limited Partnership") using the equity method, whereby the Company
adjusts the investment cost for its share of the operating partnership's
results of operations and for any distributions received or accrued.
Pursuant to Statement of Position 78-9 (SOP 78-9), "Accounting for
Investments in Real Estate Ventures," as the element of control by Boston
Capital Associates V L.L.C. does not exist over Boston Capital Tax Credit
Fund V L.P., the Limited Partnership is not consolidated with Boston Capital
Associates V L.L.C. The lack of control is demonstrated by certain rights the
limited partners of Boston Capital Tax Credit Fund V L.P. are granted in the
Partnership Agreement.
The Limited Partnership maintains its financial statements based on a March
31 year end and the Company utilizes a calendar year end.
CASH AND CASH EQUIVALENTS
Cash equivalents as of October 21, 2003 include funds held in a money market
account having an original maturity at its date of acquisition of three
months or less. During the normal course of business, the Company may have
deposits in excess of federally insured limits.
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities," an interpretation of ARB No.
51, "Consolidated Financial Statements," which provides new accounting
guidance on when to consolidate a variable interest, as defined in FIN 46, in
another entity. FIN 46 applies to variable interests in variable interest
entities acquired after January 31, 2003. For nonpublic entities, such as the
Company, FIN 46 should be implemented no later than December 31, 2004. The
managing member is in the process of analyzing FIN 46 to determine the
impact, if any, on the Company's financial statements. Management has not yet
made any determination of the potential impact FIN 46 might have on the
Company's current accounting for its investment in the Limited Partnership or
whether the investment might be required to be consolidated.
NOTE B--MEMBERS' CAPITAL CONTRIBUTIONS
The Company has one managing member--John P. Manning who has a .01% interest
and one other member--Boston Capital Companions Limited Partnership which has
a 99.99% interest. As of October 21, 2003, the managing member and the other
member have made capital contributions of $500,000 each. Under the terms of
the Operating Agreement, the managing member has no obligation to make
additional capital contributions to the Company, except possibly upon
liquidation. There are no additional capital contributions due from the
other member.
I-3
<Page>
NOTE C--INVESTMENT IN LIMITED PARTNERSHIP
On October 5, 1993, the Company was admitted as the general partner in Boston
Capital Tax Credit Fund V L.P. The Limited Partnership was formed to invest
in real estate by acquiring, holding, and disposing of Limited Partnership
interests in operating entities which will acquire, develop, rehabilitate,
operate and own newly-constructed, existing or rehabilitated low-income
apartment complexes. Pursuant to SOP 78-9, the Company has a legal obligation
to the Limited Partnership as its general partner. However, there are no
support arrangements between the Company and the Limited Partnership. The
Limited Partnership invested in the operating entities subsequent to October
21, 2003, therefore no summarized balance sheet or statement of operations is
presented.
I-4
<Page>
REZNICK FEDDER & SILVERMAN
CERTIFIED PUBLIC ACCOUNTS - A PROFESSIONAL CORPORATION
7700 OLD GEORGETOWN ROAD, SUITE 400, BETHESDA, MARYLAND 20814-6224
PHONE (301) 652-9100, FAX (301) 652-1848
www.rfs.com
BCTC V ASSIGNOR CORP.
INDEPENDENT AUDITORS' REPORT
To the Stockholder
BCTC V Assignor Corp.
We have audited the accompanying balance sheet of BCTC V Assignor Corp. as of
October 21, 2003. This balance sheet is the responsibility of the
Corporation's management. Our responsibility is to express an opinion on this
balance sheet based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
balance sheet is free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
balance sheet. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall balance sheet presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of BCTC V Assignor Corp. as of
October 21, 2003, in conformity with accounting principles generally accepted
in the United States of America.
REZNICK, FEDDER & SILVERMAN
Bethesda, Maryland
October 21, 2003
I-5
<Page>
BCTC V ASSIGNOR CORP.
BALANCE SHEET
OCTOBER 21, 2003
<Table>
ASSETS
Investment in limited partnership (note B) $ 100
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Subscription payable $ 100
Stockholder's equity
Common stock--1,000 shares authorized, issued and outstanding,
$1 par value per share 1,000
Less: subscription receivable (1,000)
----------
$ 100
==========
</Table>
The accompanying Notes are an integral part of this balance sheet.
NOTE A--ORGANIZATION
BCTC V Assignor Corp. (the "Corporation") was organized on October 15, 2003,
under the laws of the State of Delaware to act as the assignor limited partner
of, and to acquire and hold a limited partnership interest in, Boston Capital
Tax Credit Fund V L.P. (the "Limited Partnership"). The Corporation will assign
units of beneficial interest in its limited partnership interest to persons who
purchase Beneficial Assignee Certificates (BACs), on the basis of one unit of
beneficial interest for each BAC. The Corporation will not have any interest in
profits, losses or distributions on its own behalf.
RECENT ACCOUNTING PRONOUNCEMENTS
In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities", an interpretation of ARB No.
51, "Consolidated Financial Statements", which provides new accounting
guidance on when to consolidate a variable interest, as defined in FIN 46, in
another entity. FIN 46 applies to variable interests in variable interest
entities acquired after January 31, 2003. For nonpublic entities, such as the
Corporation, FIN 46 should be implemented no later than December 31, 2004.
The management is in the process of analyzing FIN 46 to determine the impact,
if any, on the Corporation's financial statements. Management has not yet
made any determination of the potential impact FIN 46 might have on the
Corporation's current accounting for its investments in the Limited
Partnership or whether the investment might be required to be consolidated.
NOTE B--INVESTMENT IN LIMITED PARTNERSHIP
On October 15, 2003, the Corporation was admitted as the assignor limited
partner in Boston Capital Tax Credit Fund V L.P. The Limited Partnership was
formed to invest in real estate by acquiring, holding, and disposing of
limited partnership interests in operating partnerships which will acquire,
develop, rehabilitate, operate and own newly-constructed, existing or
rehabilitated low-income apartment complexes.
I-6
<Page>
TABULAR INFORMATION CONCERNING
PRIOR LIMITED PARTNERSHIPS
The information contained in the following Tables I, II, III, and III-A is
presented in conjunction with and as a supplement to the narrative summary
appearing elsewhere in this Prospectus under "Prior Performance of Boston
Associates and Its Affiliates" and is qualified in its entirety by the
information contained in such narrative summary.
These Tables include information for the three-year period beginning January 1,
2000, and ending December 31, 2002 (five-year period ending March 31, 2003 for
Table III) relating to public programs in the aggregate sponsored by Boston
Associates and its affiliates which had similar investment objectives to those
of Boston Capital. Programs deemed to have "similar investment objectives" are
programs receiving Government Assistance and originally intended to provide,
generally (1) tax benefits in the form of tax losses and low-income housing and
rehabilitation tax credits which could be used by limited partners to offset
income from other sources, (2) long-term capital appreciation through increases
in the value of the programs' investments, (3) cash distributions from the sale
or refinancing of the apartment complexes owned by the operating partnerships,
and (4) in some instances, limited cash distributions from operations.
Additionally, the programs which had similar investment objectives to those of
Boston Capital also involve material risks similar to those inherent in an
investment in Boston Capital. See the section of this Prospectus entitled "Risk
Factors."
The programs listed in these Tables were organized by Boston Associates and its
affiliates generally in a two-tier structure. These two-tier programs consist of
one investment limited partnership (the "investment partnership") which invested
in a number of limited partnerships (the "operating partnerships"), each of
which owns an apartment complex for low- and moderate-income persons, which
receives Government Assistance. In the three-year period ending December 31,
2002, Boston Associates and its affiliates sponsored one public partnership. The
following table identifies the number of operating partnership interests
acquired in programs sponsored by Boston Associates and its affiliates as of
December 31, 2002, and emphasizes Boston Capital's philosophy of broad
diversification:
<Table>
<Caption>
% EQUITY # OF OPERATING AVERAGE EQUITY
COMMITTED PARTNERSHIPS PER OPERATING
PROGRAM 12/31/02 ACQUIRED # OF STATES PARTNERSHIP
- --------------------------------------------------------------------------------
Boston Capital Tax
Credit Fund IV L.P.:
Series 38 100.0% 10 7 $ 2,481,260
Series 39 100.0% 9 6 $ 2,518,836
Series 40 100.0% 16 11 $ 1,576,446
Series 41 100.0% 21 14 $ 1,341,954
Series 42 93.6% 17 9 $ 1,504,722
Series 43 52.1% 14 5 $ 1,312,224
</Table>
I-7
<Page>
In 1993, Affiliates of the General Partner formed Boston Capital Tax Credit Fund
IV L.P., which was registered under the Securities Act of 1933.
The primary investment objectives of these limited partnerships are the
preservation of the partnership's capital and the provision of current tax
benefits to investors in the form of tax credits and passive losses. Cash flow
distributions from the operating partnerships to the investment partnerships
were not an investment objective in these programs. The regulations of RHS and
other government subsidy programs limit the amount of rent which may be charged
to tenants and also limit the amount of cash flow which may be distributed, even
if greater amounts of cash flow are available.
Investors in Boston Capital will not have any interest in any of the prior
limited partnerships incorporated in the tables or in any of the apartment
complexes owned by these limited partnerships.
It should not be assumed that Investors in Boston Capital will experience
results comparable to those experienced by investors in the programs
incorporated in the following Tables.
The Tabular Information Concerning Prior Limited Partnerships and accompanying
Notes are not covered by reports of independent certified public accountants.
Additional information regarding prior public programs can be obtained upon
written request to:
Boston Capital Tax Credit Fund V L.P.
c/o Boston Capital Corporation
One Boston Place, Suite 2100
Boston, Massachusetts 02108-4406
Attn: Richard DeAgazio.
I-8
<Page>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(ON A PERCENTAGE BASIS)
Table I includes information concerning the experience of the Boston Associates
and its affiliates in raising and investing funds for public limited
partnerships having similar investment objectives to Boston Capital. Information
is included for the sole public offering organized between January 1, 2000 and
December 31, 2002, which invested in 87 operating partnerships. Table I presents
the dollar amount offered and raised, the percentage of the amount raised which
was used to pay offering costs and acquire investments, the percentage of
leverage used and the time frame for raising and investing funds.
Table I is presented as if all capital contributions were received and all
expenses and payments of capital were paid in the year in which the offering
closed, although such transactions occur over several years.
The Table should be read in conjunction with the introduction and accompanying
Notes.
I-9
<Page>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(ON A PERCENTAGE BASIS)
JANUARY 1, 2000 THROUGH DECEMBER 31, 2002
<Table>
<Caption>
PUBLIC OFFERINGS
--------------------------------------------------------------------------------------------
BCTC IV BCTC IV BCTC IV BCTC IV BCTC IV BCTC IV
L.P. L.P. L.P. L.P. L.P. L.P.
(SERIES 38) (SERIES 39) (SERIES 40) (SERIES 41) (SERIES 42) (SERIES 43)
2000 2000 2001 2001 2002 2002
------------ ------------ ------------ ------------ ------------ ------------
Dollar amount offered (1) $ 25,431,000 $ 22,955,000 $ 26,269,250 $ 28,916,260 $ 27,442,620 $ 36,379,870
Dollar amount raised (100%) 100% 100% 100% 100% 100% 100%
Less: Offering expenses
Selling commissions and
reimbursements retained
by affiliates (2) 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Selling commissions and
reimbursements to
non-affiliates (3) 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Legal and organizational 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
------------ ------------ ------------ ------------ ------------ ------------
Total offering expenses 12.50% 12.50% 12.50% 12.50% 12.50% 12.50%
============ ============ ============ ============ ============ ============
Working capital reserves 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
Amount available for investment
from limited partners 83.50% 83.50% 83.50% 83.50% 83.50% 83.50%
Acquisition fees (4) 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Acquisition expenses (5) 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Cash payments to operating
partnerships (6) 73.00% 73.00% 73.00% 73.00% 73.00% 73.00%
------------ ------------ ------------ ------------ ------------ ------------
Total acquisition costs 87.50% 87.50% 87.50% 87.50% 87.50% 87.50%
============ ============ ============ ============ ============ ============
Mortgage financing $ 13,785,926 $ 17,115,491 $ 19,043,469 $ 21,276,688 $ 19,313,102 $ 13,870,211
Additional capital (7) $ 620,502 $ 137,684 $ 207,897 $ 126,533 $ 3,134,640 $ 1,169,837
------------ ------------ ------------ ------------ ------------ ------------
Total other sources $ 14,406,428 $ 17,253,175 $ 19,251,366 $ 21,403,221 $ 22,447,742 $ 15,040,048
Amount available for investment
from offering proceeds $ 22,252,125 $ 20,085,625 $ 22,985,594 $ 25,301,728 $ 24,012,293 $ 31,832,386
------------ ------------ ------------ ------------ ------------ ------------
Total development costs $ 36,658,553 $ 37,338,800 $ 42,236,960 $ 46,704,949 $ 46,460,035 $ 46,872,434
============ ============ ============ ============ ============ ============
Percentage leverage (8) 37.61% 45.84% 45.09% 45.56% 41.57% 29.59%
Date offering began Feb 2000 Aug 2000 Feb 2001 Aug 2001 Feb 2002 Aug 2002
Average length of
offering (days) 159 184 181 153 181 122
Months to invest 90% of
amount available 2 2 3 5 1 N/A
</Table>
NOTES TO TABLE I
Note 1: The dollar amount offered and raised includes the entire amount of
investors' contributions paid.
Note 2: Includes only 1.0% of the Dealer-Manager Fee as the remaining 1.0% was
re-allotted to unaffiliated brokers. In addition, included is the 1.0%
nonaccountable expense allowance which is considered an offering expense.
Note 3: Includes selling commissions of 7% and the re-allottment by Boston
Capital Services, Inc. of 1.0% of its Dealer-Manager Fee.
Note 4: Acquisition fees are amounts paid to the general partners and affiliates
for selecting, evaluating, negotiating and closing the investment partnerships'
acquisition of operating partnership interests.
I-10
<Page>
Note 5: Acquisition expenses consist of legal and accounting fees, travel,
market studies and other expenses to be paid to third parties.
Note 6: Cash payments to non-affiliated operating partnerships include capital
contributions. The amount shown for 2002 includes 11.89% of public partnerships'
funds not yet committed.
Note 7: Additional capital represents funds contributed by the operating general
partners. Properties financed by RHS after 1987 require the operating general
partners to provide a minimum of 3% of the total development cost in equity.
Note 8: The leverage percentage equals the total amount of mortgage indebtedness
on the acquisition date or completion date divided by total development costs.
I-11
<Page>
TABLE II
COMPENSATION TO SPONSOR AND AFFILIATES
JANUARY 1, 2000 THROUGH DECEMBER 31, 2002
Table II sets forth the aggregate amount of all compensation earned by or paid
to the General Partner and its Affiliates between January 1, 2000 and December
31, 2002 for the programs included in Table I. None of the programs included in
this Table have been liquidated.
The Table should be read in conjunction with the introduction and accompanying
notes.
<Table>
<Caption>
PUBLIC OFFERINGS
---------------------------
BCTC IV BCTC IV
L.P. L.P.
(SERIES 38) (SERIES 39)
2000 2000
------------ ------------
Date offering commenced Feb 2000 Aug 2000
Dollar amount raised (1) $ 25,431,000 $ 22,921,000
Amounts paid and/or payable to sponsor and affiliates from
proceeds (1):
Underwriting fees (2) 508,620 458,420
Acquisition fees 2,161,635 1,948,285
Acquisition expense
reimbursement 508,620 458,420
Asset management fee 454,989 327,518
Dollar amount of cash generated from operating partnerships
before payments to sponsors (3) 3,777 0
Amounts paid to sponsors from operations (4) 0 0
</Table>
I-12
<Page>
Table II sets forth the aggregate amount of all compensation earned by or paid
to the General Partner and its Affiliates between January 1, 2000 and December
31, 2002 for the programs included in Table I. None of the programs included in
this Table have been liquidated.
The Table should be read in conjunction with the introduction and accompanying
notes.
<Table>
<Caption>
PUBLIC OFFERINGS
---------------------------------------------------------
BCTC IV BCTC IV BCTC IV BCTC IV
L.P. L.P. L.P. L.P.
(SERIES 40) (SERIES 41) (SERIES 42) (SERIES 43)
2001 2001 2002 2002
------------ ------------ ------------ ------------
Date offering commenced Feb 2001 Aug 2001 Feb 2002 Aug 2002
Dollar amount raised (1) $ 26,269,250 $ 28,916,260 $ 27,442,620 $ 36,379,870
Amounts paid and/or payable to sponsor
and affiliates from proceeds (1):
Underwriting fees (2) 525,385 578,325 548,852 727,597
Acquisition fees (3) 2,232,886 2,457,882 2,332,623 3,092,289
Acquisition expense
reimbursement 525,385 578,325 548,852 727,597
Asset management fee 302,518 233,897 88,991 15,671
Dollar amount of cash
generated from operating
partnerships before
payments to sponsors (4) 0 0 0 0
Amounts paid to sponsors from operations (5) 0 0 0 0
</Table>
NOTES TO TABLE II
Note 1: Table II is presented as if all capital contributions were received and
all fees payable from offering proceeds to the General Partner, its affiliates,
and their predecessors in interest were paid in the year in which the offerings
were completed; such transactions actually occur over several years.
Note 2: Underwriting fees include non-accountable expense allowances, research
report fees, due diligence fees, selling commissions, purchaser representative
fees, and capital commitment fees. These amounts do not include commissions paid
to an affiliated dealer-manager which were subsequently paid to non-affiliated
brokers. These fees are paid over one to three years.
Note 3: The Acquisition Fee is a flat fee calculated as a percentage of each
certificate sold. It is earned for selecting, evaluating, negotiating and
closing series' investments in apartment complexes.
Note 4: The dollar amount of cash generated from operating partnerships is the
total amount of cash distributions received by the investment partnerships
during the three-year period. For example: 2002 would include 2000-2002 cash
distributions for the partnership organized in 2000. Historically, cash flow
from government-subsidized apartment complexes is generated by the second full
year of operations, yet cash flow is not disbursed until financial statement
analyses are complete.
Note 5: If cash flow is unavailable to pay investment partnership operating
expenses, then expenses are either accrued until cash flow is available in
future years to repay such expenses or the sponsor pays these operating expenses
as they become due and subsequently receives reimbursement when cash flow is
available.
I-13
<Page>
TABLE III
OPERATING RESULTS OF PRIOR LIMITED PARTNERSHIPS
Table III summarizes the operating results of prior partnerships having similar
investment objectives to Boston Capital which were closed between January 1,
1998 and December 31, 2002. The public investment partnerships own interests in
157 operating partnerships.
Table III includes the actual tax credits received on a $1,000 investment. Table
III-A includes the actual tax credits received as a percentage of capital
invested by an investor. For example, if an investor received $21 of tax credits
on a $1,000 investment for a particular year in Table III, Table III-A would
show that for that year the investor received approximately 2.1% of its
investment.
The information is presented in accordance with generally accepted accounting
principles ("GAAP") except with respect to the information presented in the
tables labeled "Tax & Distribution Data Per $1000 invested on a Tax Basis",
which is presented on the tax basis method of accounting.
Significant differences can occur in operating results accounted for on a tax
versus GAAP basis. Some differences, but not all, are due to depreciation
methods and depreciable lives, and treatment of capitalized construction period
interest and expenses. The usual effect of these differences is that taxable
losses under GAAP would have been less than the taxable losses. Both GAAP and
tax losses are reported in the table.
The Table should be read in conjunction with the introduction and accompanying
Notes.
I-14
<Page>
TABLE III
OPERATING RESULTS OF PRIOR LIMITED PARTNERSHIPS
FROM OPENING THROUGH MARCH 31, 2003
PUBLIC OFFERINGS CLOSED DURING 1998
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 32)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
1999 2000 2001 2002 2003
------------ ------------ ------------ ------------ ------------
Gross Revenues 727,112 342,051 316,656 46,041 29,408
Profit on sale of properties 0 0 0 0 0
Less:
Losses from operating
partnerships (1) 56,660 (1,245,350) (2,669,373) (2,062,829) (1,894,224)
Operating Expenses (3) (505,039) (554,745) (432,918) (375,702) (391,514)
Interest Expense 0 0 0 0
Depreciation (2) (8,897) (29,738) (36,303) (36,625) (36,624)
Net Income--GAAP Basis 269,836 (1,487,782) (2,821,938) (2,429,115) (2,292,954)
Taxable Income
from operations (4) (451,885) (1,514,735) (2,903,227) (3,037,663) (2,529,990)
gain on sale 0 0 0 0 0
Cash generated from operations (6) 1,149,015 261,990 (291,574) (284,985) (77,662)
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Cash generated from operations,
sales and refinancing 1,149,015 261,990 (291,574) (284,985) (77,662)
Less: Cash distributions to investors
from operating cash flow 0 0 0 0 0
from sales and refinancing 0 0 0 0 0
from other 0 0 0 0 0
Cash generated (deficiency) after
cash distributions 1,149,015 261,990 (291,574) (284,985) (77,662)
Less: Special items (not including
sales and refinancing) (identify
and quantify) 0 0 0 0 0
Cash generated (deficiency) after
cash distributions and
special items 1,149,015 261,990 (291,574) (284,985) (77,662)
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1998 1999 2000 2001 2002
------------ ------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 21 41 89 102 104
State Credit 0 0 0 0 0
Ordinary Income (loss) (10) (31) (61) (65) (53)
from operations (10) (31) (61) (65) (53)
from recapture 0 0 0 0 0
Capital gain (loss) 0 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0 0
Return of capital 0 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0 0
Refinancing 0 0 0 0 0
Operations 0 0 0 0 0
Other 0 0 0 0 0
Amount remaining invested
in program properties 98.53%
</Table>
I-15
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 33)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
1999 2000 2001 2002 2003
------------ ------------ ------------ ------------ ------------
Gross Revenues 256,081 312,853 197,659 21,827 1,841
Profit on sale of properties 0 0 0 0 0
Less:
Losses from operating
partnerships (1) 187,290 (595,041) (1,294,005) (1,059,178) (892,301)
Operating Expenses (3) (239,965) (396,338) (260,722) (195,327) (200,918)
Interest Expense 0 0 0 0 0
Depreciation (2) (9,308) (26,578) (27,066) (27,266) (27,276)
Net Income--GAAP Basis 194,098 (705,104) (1,384,134) (1,259,944) (1,118,654)
Taxable Income
from operations (4) (147,561) (661,228) (1,692,569) (1,581,039) (2,347,325)
gain on sale 0 0 0 0 0
Cash generated from operations (6) (85,106) 75,787 (108,662) (181,083) 4,072
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Cash generated from operations,
sales and refinancing (85,106) 75,787 (108,662) (181,083) 4,072
Less: Cash distributions to investors
from operating cash flow 0 0 0 0 0
from sales and refinancing 0 0 0 0 0
from other 0 0 0 0 0
Cash generated (deficiency) after
cash distributions (85,106) 75,787 (108,662) (181,083) 4,072
Less: Special items (not including
sales and refinancing) (identify
and quantify) 0 0 0 0 0
Cash generated (deficiency) after
cash distributions and
special items (85,106) 75,787 (108,662) (181,083) 4,072
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1998 1999 2000 2001 2002
------------ ------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 19 37 94 103 105
State Credit 0 0 0 0 0
Ordinary Income (loss) (2) (25) (56) (54) (51)
from operations (2) (25) (56) (54) (51)
from recapture 0 0 0 0 0
Capital gain (loss) 0 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0 0
Return of capital 0 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0 0
Refinancing 0 0 0 0 0
Operations 0 0 0 0 0
Other 0 0 0 0 0
Amount remaining invested
in program properties 99.15%
</Table>
I-16
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 34)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
1999 2000 2001 2002 2003
------------ ------------ ------------ ------------ ------------
Gross Revenues 156,247 385,293 125,489 5,402 2,482
Profit on sale of properties 0 0 0 0 0
Less:
Losses from operating
partnerships (1) (218) (468,712) (2,140,987) (1,760,695) (1,610,062)
Operating Expenses (3) (116,080) (573,910) (364,760) (314,016) (334,801)
Interest Expense 0 0 0 0 0
Depreciation (2) 0 (41,853) (44,236) (43,940) (43,938)
Net Income--GAAP Basis 39,949 (699,182) (2,424,494) (2,113,249) (1,986,319)
Taxable Income
from operations (4) 1,650 (787,448) (2,964,741) (2,364,060) (2,276,581)
gain on sale 0 0 0 0 0
Cash generated from operations (6) (114,918) (33,256) (236,495) (770) (38,602)
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Cash generated from operations,
sales and refinancing (114,918) (33,256) (236,495) (770) (38,602)
Less: Cash distributions to investors
from operating cash flow 0 0 0 0 0
from sales and refinancing 0 0 0 0 0
from other 0 0 0 0 0
Cash generated (deficiency) after
cash distributions (114,918) (33,256) (236,495) (770) (38,602)
Less: Special items (not including
sales and refinancing) (identify
and quantify) 0 0 0 0 0
Cash generated (deficiency) after
cash distributions and
special items (114,918) (33,256) (236,495) (770) (38,602)
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1998 1999 2000 2001 2002
------------ ------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 0 16 79 98 98
State Credit 0 0 0 0 0
Ordinary Income (loss) 15 (19) (83) (66) (64)
from operations 15 (19) (83) (66) (64)
from recapture 0 0 0 0 0
Capital gain (loss) 0 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0 0
Return of capital 0 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0 0
Refinancing 0 0 0 0 0
Operations 0 0 0 0 0
Other 0 0 0 0 0
Amount remaining invested in
program properties 99.62%
</Table>
I-17
<Page>
PUBLIC OFFERINGS CLOSED DURING 1999
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 35)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
1999 2000 2001 2002 2003
------------ ------------ ------------ ------------ ------------
Gross Revenues 1,803 567,711 236,430 81,661 56,678
Profit on sale of properties 0 0 0 0 0
Less:
Losses from operating
partnerships (1) 0 (194,048) (1,875,497) (875,205) (1,198,689)
Operating Expenses (3) (8,570) (410,088) (338,492) (288,877) (259,102)
Interest Expense 0 0 0 0 0
Depreciation (2) 0 (225,179) (128,479) (129,251) (129,236)
Net Income--GAAP Basis (6,767) (261,604) (2,106,038) (1,211,672) (1,530,349)
Taxable Income
from operations (4) 0 (309,302) (2,632,426) (1,573,175) (2,093,874)
gain on sale 0 0 0 0 0
Cash generated from operations (6) (2,095,601) 1,894,591 (188,620) (114,631) (191,844)
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Cash generated from operations,
sales and refinancing (2,095,601) 1,894,591 (188,620) (114,631) (191,844)
Less: Cash distributions to investors
from operating cash flow 0 0 0 0 0
from sales and refinancing 0 0 0 0 0
from other 0 0 0 0 0
Cash generated (deficiency) after
cash distributions (2,095,601) 1,894,591 (188,620) (114,631) (191,844)
Less: Special items (not including
sales and refinancing) (identify
and quantify) 0 0 0 0 0
Cash generated (deficiency) after
cash distributions and
special items (2,095,601) 1,894,591 (188,620) (114,631) (191,844)
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1999 2000 2001 2002
------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 4 39 88 95
State Credit 0 0 0 0
Ordinary Income (loss) (9) (75) (49) (63)
from operations (9) (75) (49) (63)
from recapture 0 0 0 0
Capital gain (loss) 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0
Return of capital 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0
Refinancing 0 0 0 0
Operations 0 0 0 0
Other 0 0 0 0
Amount remaining invested in
program properties 99.36%
</Table>
I-18
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 36)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2000 2001 2002 2003
------------ ------------ ------------ ------------
Gross Revenues 175,394 83,521 9,428 9,488
Profit on sale of properties 0 0 0 0
Less:
Losses from operating partnerships (1) (160,352) (457,746) (1,268,122) (982,302)
Operating Expenses (3) (240,981) (231,839) (182,579) (189,293)
Interest Expense 0 0 0 0
Depreciation (2) (78,850) (86,996) (88,463) (88,463)
Net Income--GAAP Basis (304,789) (693,060) (1,529,736) (1,250,570)
Taxable Income from operations (4) (149,757) (1,901,563) (508,805) (1,616,793)
gain on sale 0 0 0 0
Cash generated from operations (6) (119,222) 38,217 (76,103) 50,551
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Cash generated from operations, sales
and refinancing (119,222) 38,217 (76,103) 50,551
Less: Cash distributions to investors
from operating cash flow 0 0 0 0
from sales and refinancing 0 0 0 0
from other 0 0 0 0
Cash generated (deficiency) after
cash distributions (119,222) 38,217 (76,103) 50,551
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (119,222) 38,217 (76,103) 50,551
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1999 2000 2001 2002
------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 2 64 99 98
State Credit 0 0 0 0
Ordinary Income (loss) (8) (85) (24) (76)
from operations (8) (85) (24) (76)
from recapture 0 0 0 0
Capital gain (loss) 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0
Return of capital 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0
Refinancing 0 0 0 0
Operations 0 0 0 0
Other 0 0 0 0
Amount remaining invested
in program properties 99.91%
</Table>
I-19
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 37)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2000 2001 2002 2003
------------ ------------ ------------ ------------
Gross Revenues 145,974 331,766 11,642 3,813
Profit on sale of properties 0 0 0 0
Less:
Losses from operating partnerships (1) (44,958) (318,507) (750,493) (1,337,643)
Operating Expenses (3) (154,532) (237,477) (217,896) (215,182)
Interest Expense 0 0 0 0
Depreciation (2) 0 (91,645) (94,713) (94,823)
Net Income--GAAP Basis (53,516) (315,863) (1,051,460) (1,643,835)
Taxable Income from operations (4) (9,645) (390,505) (911,637) (2,021,202)
gain on sale 0 0 0 0
Cash generated from operations (6) (4,554) 96,442 (131,190) (93,768)
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Cash generated from operations, sales
and refinancing (4,554) 96,442 (131,190) (93,768)
Less: Cash distributions to investors
from operating cash flow 0 0 0 0
from sales and refinancing 0 0 0 0
from other 0 0 0 0
Cash generated (deficiency) after
cash distributions (4,554) 96,442 (131,190) (93,768)
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (4,554) 96,442 (131,190) (93,768)
</Table>
<Table>
<Caption>
TAX & DISTRIBUTION DATA FOR THE TAX PERIOD ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 1999 2000 2001 2002
------------ ------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 0 14 71 91
State Credit 0 0 0 0
Ordinary Income (loss) (1) (9) (37) (80)
from operations (1) (9) (37) (80)
from recapture 0 0 0 0
Capital gain (loss) 0 0 0 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0 0 0 0
Return of capital 0 0 0 0
Source (on cash basis):
Sales 0 0 0 0
Refinancing 0 0 0 0
Operations 0 0 0 0
Other 0 0 0 0
Amount remaining invested
in program properties 99.93%
</Table>
I-20
<Page>
PUBLIC OFFERINGS CLOSED DURING 2000
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 38)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2000 2001 2002 2003
------------ ------------ ------------ ------------
Gross Revenues 1,437 207,525 92,319 14,985
Profit on sale of properties 0 0 0 0
Less:
Losses from operating partnerships (1) 0 (133,908) (1,230,809) (892,478)
Operating Expenses (3) (83,131) (219,590) (216,080) (194,567)
Interest Expense 0 0 0 0
Depreciation (2) 0 0 (50,939) (98,914)
Net Income--GAAP Basis (81,694) (145,973) (1,405,509) (1,170,974)
Taxable Income from operations (4) 0 (151,741) (1,685,712) (1,415,038)
gain on sale 0 0 0 0
Cash generated from operations (6) 361,642 156,853 (161,584) 110,534
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Cash generated from operations, sales
and refinancing 361,642 156,853 (161,584) 110,534
Less: Cash distributions to investors
from operating cash flow 0 0 0 0
from sales and refinancing 0 0 0 0
from other 0 0 0 0
Cash generated (deficiency) after cash
distributions 361,642 156,853 (161,584) 110,534
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 361,642 156,853 (161,584) 110,534
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD
TAX & DISTRIBUTION DATA ENDED DECEMBER 31,
PER $1,000 INVESTED (7) 2000 2001 2002
------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 11 45 90
State Credit 0 0
Ordinary Income (loss) (30) (67) (55)
from operations (30) (67) (55)
from recapture 0 0 0
Capital gain (loss) 0 0 0
Cash Distributions to investors:
Source (on GAAP basis):
Investment income 0 0 0
Return of capital 0 0 0
Source (on cash basis):
Sales 0 0 0
Refinancing 0 0 0
Operations 0 0 0
Other 0 0 0
Amount remaining invested in program properties 99.44%
</Table>
I-21
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 39)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2001 2002 2003
------------ ------------ ------------
Gross Revenues 49,735 116,518 2,441
Profit on sale of properties 0 0 0
Less:
Losses from operating partnerships (1) 3,760 (996,269) (1,093,075)
Operating Expenses (3) (196,332) (222,619) (159,861)
Interest Expense 0 0 0
Depreciation (2) 0 (24,477) (90,324)
Net Income--GAAP Basis (142,837) (1,126,847) (1,340,819)
Taxable Income from operations (4) 69,342 (1,165,268) (1,639,228)
gain on sale 0 0 0
Cash generated from operations (6) (147,183) (71,182) (16,079)
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
Cash generated from operations, sales
and refinancing (147,183) (71,182) (16,079)
Less: Cash distributions to investors
from operating cash flow 0 0 0
from sales and refinancing 0 0 0
from other 0 0 0
Cash generated (deficiency) after cash distributions (147,183) (71,182) (16,079)
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0 0
Cash generated (deficiency) after cash
distributions and special items (147,183) (71,182) (16,079)
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD ENDED
TAX & DISTRIBUTION DATA DECEMBER 31,
PER $1,000 INVESTED (7) 2000 2001 2002
------------ ------------ ------------
Federal Income Tax Results
Federal Credit (5) 0 22 84
State Credit 0 0 0
Ordinary Income (loss) 11 (55) (71)
from operations 11 (55) (71)
from recapture 0 0 0
Capital gain (loss) 0 0 0
Cash Distributions to investors:
Source (on GAAP basis) 0 0
Investment income 0 0 0
Return of capital 0 0 0
Source (on cash basis):
Sales 0 0 0
Refinancing 0 0 0
Operations 0 0 0
Other 0 0 0
Amount remaining invested in program properties 98.54%
</Table>
I-22
<Page>
PUBLIC OFFERINGS CLOSED DURING 2001
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 40)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
STATEMENT PERIOD ENDED MARCH 31,
2001 2002 2003
------------ ------------ ------------
Gross Revenues 2,317 147,345 119,938
Profit on sale of properties 0 0 0
Less:
Losses from operating partnerships (1) 0 (438,656) (986,508)
Operating Expenses (3) (113,781) (306,075) (222,136)
Interest Expense 0 0 0
Depreciation (2) 0 0 (32,319)
Net Income--GAAP Basis (111,464) (597,386) (1,121,025)
Taxable Income from operations (4) 0 (586,896) (1,086,143)
gain on sale 0 0 0
Cash generated from operations (6) (1,922,962) 836,927 209,484
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
Cash generated from operations, sales
and refinancing (1,922,962) 836,927 209,484
Less: Cash distributions to investors
from operating cash flow 0 0 0
from sales and refinancing 0 0 0
from other 0 0 0
Cash generated (deficiency) after cash distributions (1,922,962) 836,927 209,484
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0 0
Cash generated (deficiency) after cash
distributions and special items (1,922,962) 836,927 209,484
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD ENDED
TAX & DISTRIBUTION DATA DECEMBER 31,
PER $1,000 INVESTED (7) 2001 2002
------------ ------------
Federal Income Tax Results
Federal Credit (5) 14 79
State Credit 0 0
Ordinary Income (loss) (19) (42)
from operations (19) (42)
from recapture 0 0
Capital gain (loss) 0 0
Cash Distributions to investors:
Source (on GAAP basis) 0
Investment income 0 0
Return of capital 0 0
Source (on cash basis):
Sales 0 0
Refinancing 0 0
Operations 0 0
Other 0 0
Amount remaining invested in program properties 99.65%
</Table>
I-23
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 41)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2002 2003
------------ ------------
Gross Revenues 52,147 74,991
Profit on sale of properties 0 0
Less:
Losses from operating partnerships (1) (94,125) (1,443,650)
Operating Expenses (3) (241,945) (346,349)
Interest Expense 0 0
Depreciation (2) 0 (133,377)
Net Income--GAAP Basis (283,923) (1,848,385)
Taxable Income from operations (4) (120,068) (2,867,903)
gain on sale 0 0
Cash generated from operations (6) (47,951) (48,190)
Cash generated from sales 0 0
Cash generated from refinancing 0 0
Cash generated from operations, sales
and refinancing (47,951) (48,190)
Less: Cash distributions to investors
from operating cash flow 0 0
from sales and refinancing 0 0
from other 0 0
Cash generated (deficiency) after cash distributions (47,951) (48,190)
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0
Cash generated (deficiency) after cash
distributions and special items (47,951) (48,190)
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD ENDED
TAX & DISTRIBUTION DATA DECEMBER 31,
PER $1,000 INVESTED (7) 2001 2002
------------ ------------
Federal Income Tax Results
Federal Credit (5) 1 45
State Credit 0 0
Ordinary Income (loss) (7) (95)
from operations (7) (95)
from recapture 0 0
Capital gain (loss) 0 0
Cash Distributions to investors:
Source (on GAAP basis) 0
Investment income 0 0
Return of capital 0 0
Source (on cash basis):
Sales 0 0
Refinancing 0 0
Operations 0 0
Other 0 0
Amount remaining invested in program properties 99.94%
</Table>
I-24
<Page>
PUBLIC OFFERINGS CLOSED DURING 2002
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 42)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2002 2003
---------- ---------
Gross Revenues 986 121,043
Profit on sale of properties 0 0
Less:
Losses from operating partnerships (1) 0 (404,748)
Operating Expenses (3) (111,253) (237,706)
Interest Expense 0 0
Depreciation (2) 0 0
Net Income--GAAP Basis (110,267) (521,411)
Taxable Income from operations (4) 0 (755,961)
gain on sale 0 0
Cash generated from operations (6) (1,322,182) 1,306,517
Cash generated from sales 0 0
Cash generated from refinancing 0 0
Cash generated from operations, sales and refinancing (1,322,182) 1,306,517
Less: Cash distributions to investors
from operating cash flow 0 0
from sales and refinancing 0 0
from other 0 0
Cash generated (deficiency) after cash distributions (1,322,182) 1,306,517
Less: Special items (not including sales and
refinancing) (identify and quantify) 0 0
Cash generated (deficiency) after cash
distributions and special items (1,322,182) 1,306,517
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD ENDED
TAX & DISTRIBUTION DATA DECEMBER 31,
PER $1,000 INVESTED (7) 2002
----------
Federal Income Tax Results
Federal Credit (5) 16
State Credit 0
Ordinary Income (loss) (30)
from operations (30)
from recapture 0
Capital gain (loss) 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0
Return of capital 0
Source (on cash basis):
Sales 0
Refinancing 0
Operations 0
Other 0
Amount remaining invested in program properties 100%
</Table>
I-25
<Page>
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 43)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2003
----------
Gross Revenues 30,298
Profit on sale of properties
Less:
Losses from operating partnerships (1) (304,873)
Operating Expenses (3) (215,795)
Interest Expense 0
Depreciation (2) 0
Net Income--GAAP Basis (490,370)
Taxable Income from operations (4) (193,688)
gain on sale 0
Cash generated from operations (6) (1,103,274)
Cash generated from sales 0
Cash generated from refinancing 0
Cash generated from operations, sales and refinancing (1,103,274)
Less: Cash distributions to investors
from operating cash flow 0
from sales and refinancing 0
from other 0
Cash generated (deficiency) after cash distributions (1,103,274)
Less: Special items (not including sales and
refinancing) (identify and quantify) 0
Cash generated (deficiency) after cash
distributions and special items (1,103,274)
</Table>
<Table>
<Caption>
FOR THE TAX PERIOD ENDED
TAX & DISTRIBUTION DATA DECEMBER 31,
PER $1,000 INVESTED (7) 2002
----------
Federal Income Tax Results
Federal Credit (5) 4
State Credit 0
Ordinary Income (loss) (3)
from operations (3)
from recapture 0
Capital gain (loss) 0
Cash Distributions to investors:
Source (on GAAP basis)
Investment income 0
Return of capital 0
Source (on cash basis):
Sales 0
Refinancing 0
Operations 0
Other 0
Amount remaining invested in program properties 100%
</Table>
I-26
<Page>
PUBLIC OFFERINGS CLOSED DURING 2003
BOSTON CAPITAL TAX CREDIT FUND IV L.P. (SERIES 44)
<Table>
<Caption>
FOR THE FINANCIAL STATEMENT
PERIOD ENDED MARCH 31,
2003
----------
Gross Revenues 1,379
Profit on sale of properties
Less:
Losses from operating partnerships (1) 0
Operating Expenses (3) (116,399)
Interest Expense 0
Depreciation (2) 0
Net Income--GAAP Basis (115,020)
Taxable Income from operations (4) (6,086)
gain on sale 0
Cash generated from operations (6) 701,819
Cash generated from sales 0
Cash generated from refinancing 0
Cash generated from operations, sales and refinancing 701,819
Less: Cash distributions to investors
from operating cash flow 0
from sales and refinancing 0
from other 0
Cash generated (deficiency) after cash distributions 701,819
Less: Special items (not including sales and
refinancing) (identify and quantify) 0
Cash generated (deficiency) after cash
distributions and special items 701,819
</Table>
I-27
<Page>
NOTES TO TABLE III
Note 1: This figure represents the GAAP income (loss) allocable to the public
investment partnerships from their investment in operating partnerships. The
GAAP income (loss) is gross rental income less ordinary operating expenses,
interest expense, depreciation and certain non-recurring fees, such as loan
guarantee fees, lease-up fees and partnership management fees paid by the
operating partnerships.
Note 2: This figure represents the amortization by the investment partnerships
of its organization expense over a 60-month period commencing in the month
initial investor admission occurs.
Note 3: Operating expenses consist of investor service costs and legal and
accounting fees of the investment partnerships and expenses paid from equity
which includes partnership management fees, initial investor service fees and
capital commitment fees reported on an accrual basis.
Note 4: The taxable income (losses) for the investment partnerships represent
losses from Operating Partnerships which in turn consist substantially of
depreciation and mortgage interest.
Note 5: Federal credits include low-income housing tax credits and historic tax
credits.
Note 6: Cash generated from operations is the net income (loss), net of non-cash
expenses, adjusted for changes in accounts receivable and payable and
distributions received from the operating partnerships.
Note 7: Federal low-income housing tax credits and historic tax credits and
taxable income (loss), per $1,000 invested represents the limited partners'
allocable share of such items divided by the capital contributed by the limited
partners divided by $1,000. This information is presented on a Tax basis and not
a GAAP basis.
Note 8: The information provided in the tables labeled "Tax & Distribution Data
per $1,000 invested on a Tax Basis" is through the period December 31, 2002.
I-28
<Page>
TABLE III-A
Table III-A summarizes the Actual Tax Credit results for programs closed
during the period January 1, 1988 through December 31, 2002, of the four
public partnerships sponsored by affiliates of Boston Associates. The Actual
Tax Credits represent annual tax credits as a percentage of capital invested
by an investor. The percentage is calculated by dividing the amount of tax
credits received for the period by the amount of capital invested. For
example, for each dollar invested in BCTC 1, the investor received
approximately $0.1096 of tax credits in 1989. Likewise, the headings
"Cumulative" and "Overall Tax Credit Objective" represent cumulative tax
credits as a percentage of capital invested by an investor.
<Table>
<Caption>
FINAL ACTUAL TAX CREDITS (%)(3)(4)
EQUITY CLOSING ------------------------------------------------------------------------------
PROGRAM RAISED DATE 1988 1989 1990(1) 1991 1992 1993 1994 1995
- -------------- ---------- ------------ ------ ------ ------- ------ ------ ------ ------ ------
BCTC 1 12,999,000 Dec. 1988 1.00 10.96 21.81 14.02 14.01 14.05 14.01 14.01
BCTC 2 (CA)(2) 8,303,000 Apr. 1989 4.15 24.78 29.17 26.75 16.91 10.96 10.43
BCTC 3 28,822,000 May 1989 11.99 18.46 12.72 12.66 12.80 12.80 12.73
BCTC 4 29,788,160 Jun. 1989 7.74 17.16 13.58 12.32 12.57 12.24 12.24
BCTC 5 (CA)(2) 4,899,000 Jul. 1989 7.03 24.18 24.93 21.29 15.02 11.01 10.59
BCTC 6 12,935,780 Sept. 1989 2.91 15.21 14.56 13.15 12.99 12.91 12.90
BCTC II 7 10,361,000 Dec. 1989 6.16 11.70 16.93 11.78 11.96 12.04 12.04
BCTC II 9 41,574,018 May 1990 9.30 11.34 11.68 12.39 13.30 13.56
BCTC II 10 24,288,998 Aug. 1990 3.10 10.24 11.85 13.97 14.47 14.62
BCTC II 11 24,735,003 Dec. 1990 4.50 7.78 12.13 12.67 13.16 13.20
BCTC II 12 29,710,003 May 1991 4.70 10.91 11.98 14.12 14.61
BCTC II 14 55,728,996 Dec. 1991 3.80 8.79 12.32 13.83 14.23
BCTC III 15 38,705,000 Jun. 1992 3.10 9.07 13.22 14.29
BCTC III 16 54,293,000 Dec. 1992 1.40 4.36 8.56 13.75
BCTC III 17 50,000,000 May 1993 3.14 8.21 13.42
BCTC III 18 36,162,000 Oct. 1993 0.07 7.18 12.67
BCTC III 19 40,800,000 Dec. 1993 0.00 1.82 10.10
BCTC IV 20 38,667,000 Jun. 1994 2.10 8.29
BCTC IV 21 18,927,000 Sept. 1994 0.00 3.43
BCTC IV 22 25,644,000 Dec. 1994 0.00 4.59
BCTC IV 23 33,366,000 Jun. 1995 2.50
BCTC IV 24 21,697,000 Sept. 1995 1.36
BCTC IV 25 30,248,000 Dec. 1995 0.00
BCTC IV 26 39,959,000 Jun. 1996
BCTC IV 27 24,607,000 Sept. 1996
BCTC IV 28 39,999,000 Jan. 1997
<Caption>
OVERALL
ACTUAL TAX CREDITS (%)(3)(4) CUMU- CUMULATIVE TIME TAX CREDIT
-------------------------------------------------------------------- LATIVE INVESTED THRU OBJECTIVE
PROGRAM 1996 1997 1998 1999 2000 2001 2002 (%) 2002 (%)
- -------------- ------- ------ ------ ------ ------ ------ ------ ------ --------------- ----------
BCTC 1 14.01 14.02 11.94 1.10 -1.45 0.00 0.00 143.49 14 yrs. 130-150
BCTC 2 (CA)(2) 10.12 10.12 10.12 9.58 3.56 0.92 0.56 168.13 13 yrs. 8 mos. 170
BCTC 3 12.73 12.72 12.37 5.97 0.52 0.44 0.44 139.35 13 yrs. 7 mos. 130-150
BCTC 4 12.25 12.26 12.26 9.50 0.44 0.00 0.00 134.56 13 yrs. 6 mos. 130-150
BCTC 5 (CA)(2) 10.30 10.30 9.98 9.53 1.85 0.83 0.06 156.90 13 yrs. 5 mos. 150-170
BCTC 6 13.47 12.71 12.72 11.33 2.84 0.25 0.16 138.11 13 yrs. 3 mos. 130-150
BCTC II 7 12.04 12.04 12.04 7.08 5.07 2.97 0.42 134.27 13 yrs. 130-140
BCTC II 9 13.67 13.67 13.56 12.63 8.06 2.69 2.26 138.11 12 yrs. 7 mos. 130-150
BCTC II 10 14.60 14.60 14.43 13.06 11.39 3.96 2.05 142.34 12 yrs. 4 mos. 130-150
BCTC II 11 13.20 13.20 13.15 13.11 12.39 6.33 1.01 135.83 12 yrs. 130-150
BCTC II 12 14.58 14.62 14.59 14.56 14.52 9.57 3.56 142.32 11 yrs. 7 mos. 140-160
BCTC II 14 14.33 14.35 14.18 14.14 13.94 12.55 4.83 141.29 11 yrs. 140-160
BCTC III 15 14.65 14.69 14.66 14.56 14.54 14.54 11.43 138.75 10 yrs. 6 mos. 140-160
BCTC III 16 14.05 14.00 14.00 14.00 14.00 13.99 13.97 126.08 10 yrs. 140-160
BCTC III 17 13.97 13.97 13.97 13.97 13.61 13.49 13.46 121.21 9 yrs. 7 mos. 140-160
BCTC III 18 13.31 13.34 13.34 13.32 13.34 13.34 13.35 113.26 9 yrs. 2 mos. 140-160
BCTC III 19 12.45 13.28 13.33 13.33 13.33 13.33 13.33 104.30 9 yrs. 140-160
BCTC IV 20 13.24 13.30 13.32 13.32 13.32 13.32 13.32 103.53 8 yrs. 6 mos. 130-150
BCTC IV 21 9.07 11.34 11.90 12.03 12.09 12.06 12.05 83.97 8 yrs. 3 mos. 130-150
BCTC IV 22 10.28 11.95 12.54 12.65 12.63 12.63 12.48 89.75 8 yrs. 130-150
BCTC IV 23 8.97 12.88 13.10 13.10 13.10 13.10 13.10 89.85 7 yrs. 6 mos. 130-150
BCTC IV 24 5.03 11.21 12.75 12.76 12.72 12.75 12.76 81.34 7 yrs. 3 mos. 130-150
BCTC IV 25 1.34 10.77 12.52 12.28 12.52 12.37 12.37 74.17 7 yrs. 130-150
BCTC IV 26 2.10 5.90 10.04 11.34 11.83 11.82 11.82 64.85 6 yrs. 6 mos. 120-140
BCTC IV 27 0.74 2.01 6.85 9.82 11.29 11.40 11.40 53.51 6 yrs. 3 mos. 120-140
BCTC IV 28 0.00 0.66 4.90 8.80 10.44 10.47 10.53 45.80 5 yrs. 11 mos. 120-140
</Table>
I-29
<Page>
<Table>
<Caption>
FINAL ACTUAL TAX CREDITS (%)(3)(4)
EQUITY CLOSING ------------------------------------------------------------------------------
PROGRAM RAISED DATE 1988 1989 1990(1) 1991 1992 1993 1994 1995
- -------------- ---------- ------------ ------ ------ ------- ------ ------ ------ ------ ------
BCTC IV 29 39,918,000 Jun. 1997
BCTV IV 30 26,490,750 Sept. 1997
BCTC IV 31 44,057,750 Jan. 1998
BCTC IV 32 47,431,000 Jun. 1998
BCTC IV 33 26,362,000 Sept. 1998
BCTC IV 34 35,273,000 Feb. 1999
BCTC IV 35 33,004,625 Jun. 1999
BCTC IV 36 21,068,375 Sept. 1999
BCTC IV 37 25,125,000 Jan. 2000
BCTC IV 38 25,431,000 Jul. 2000
BCTC IV 39 22,921,000 Jan. 2001
BCTC IV 40 26,269,250 Jul. 2001
BCTC IV 41(5) 28,966,260 Jan. 2002
BCTC IV 42(5) 27,442,620 Jul. 2002
===============
Total $ 1,206,979,588
<Caption>
OVERALL
ACTUAL TAX CREDITS (%)(3)(4) CUMU- CUMULATIVE TIME TAX CREDIT
--------------------------------------------------------- LATIVE INVESTED THRU OBJECTIVE
PROGRAM 1996 1997 1998 1999 2000 2001 2002 (%) 2002 (%)
- -------------- ------ ------ ------ ------ ------ ------ ------ ------ --------------- ----------
BCTC IV 29 0.00 4.92 8.39 10.76 10.79 10.79 45.65 5 yrs. 6 mos. 110-130
BCTV IV 30 0.00 1.93 7.49 10.25 10.61 10.57 40.85 5 yrs. 3 mos. 110-130
BCTC IV 31 0.00 2.83 8.05 10.29 10.34 10.32 41.83 4 yrs. 11 mos. 110-130
BCTC IV 32 2.08 4.11 8.87 10.24 10.35 35.65 4 yrs. 6 mos. 110-120
BCTC IV 33 1.95 3.66 9.40 10.32 10.50 35.83 4 yrs. 3 mos. 110-120
BCTC IV 34 0.00 1.60 7.89 9.79 9.79 29.07 3 yr. 10 mos. 100-120
BCTC IV 35 0.39 3.95 8.79 9.54 22.67 3 yr. 6 mos. 100-110
BCTC IV 36 0.16 6.39 9.87 9.80 26.22 3 yr. 3 mos. 100-110
BCTC IV 37 0.00 1.37 7.13 9.10 17.60 2 yr. 11 mos. 100-110
BCTC IV 38 1.35 4.49 9.18 15.02 2 yr. 5 mos. 95-100
BCTC IV 39 2.20 8.36 10.56 1 yr. 11 mos. 95-100
BCTC IV 40 1.81 8.00 9.81 1 yr 5 mos. 95-100
BCTC IV 41(5) 0.04 4.47 4.51 11 mos. 95-100
BCTC IV 42(5) 2.04 2.04 5 mos. 97.5-102.5
</Table>
I-30
<Page>
NOTES TO TABLE III-A
(1) The 1990 results reflect, where applicable, the election available to
partnerships owning interests in properties qualifying for federal housing
tax credits pursuant to the 1990 Omnibus Budget Reconciliation Act which
enables individual investors who held an interest in those partnerships
prior to October 31, 1990, to utilize only in 1990 up to 150% of the annual
federal housing tax credit, otherwise allowable for 1990. Where this
election was made, the annual federal housing tax credit has been reduced
by the 50% bonus ratably and will continue to be reduced over the remaining
years of the credit period.
(2) These programs offered both California and federal housing tax credits.
(3) Each investor's first year yield may vary slightly based upon actual date
of investor admission.
(4) The only material benefit from these programs may be tax credits which may
mean that a material portion of each tax credit may represent a return of
the money originally invested if there is not enough money from the sale or
refinancing of the respective apartment complexes to return each investor's
capital contribution.
(5) As with all programs less than one year old, these returns are for a
partial year.
BCTC is Boston Capital Tax Credit Fund.
BCTC II is Boston Capital Tax Credit Fund II.
BCTC III is Boston Capital Tax Credit Fund III.
BCTC IV is Boston Capital Tax Credit Fund IV.
I-31
<Page>
[This Page Intentionally Left Blank]
I-32
<Page>
================================================================================
BOSTON CAPITAL TAX CREDIT FUND V L.P.
AGREEMENT OF LIMITED PARTNERSHIP
================================================================================
As of October 15, 2003
<Page>
TABLE OF CONTENTS
AGREEMENT OF LIMITED PARTNERSHIP
<Table>
<Caption>
PAGE
----
ARTICLE I
CONTINUATION, NAME, PLACE OF BUSINESS, PURPOSE AND TERM A-1
1.01 Continuation of Partnership A-1
1.02 Name, Place of Business and Name and Address of Resident Agent A-1
1.03 Purpose A-2
1.04 Term A-2
ARTICLE II
DEFINED TERMS A-2
2.01 Defined Terms A-2
ARTICLE III
PARTNERS AND CAPITAL A-15
3.01 General Partner A-15
3.02 Limited Partner A-15
3.03 Assignees A-16
3.04 Partnership Capital A-18
3.05 Liability of Partners and Assignees A-20
ARTICLE IV
DISTRIBUTIONS OF CASH; ALLOCATIONS OF PROFITS, CREDITS AND LOSSES A-21
4.01 Allocations of Profits, Credits and Losses and
Distributions of Cash Available for Distribution A-21
4.02 Distributions of Liquidation, Sale or Refinancing Proceeds A-22
4.03 Allocation of Gains and Losses A-22
4.04 Determination of Allocations and Distributions
Among Partners and Assignees A-23
4.05 Capital Accounts A-26
4.06 Authority of General Partners to Vary Allocations to
Preserve and Protect Partners' Intent A-26
4.07 Allocations Between and Among Series A-27
4.08 Special Allocations A-27
ARTICLE V
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER A-28
5.01 Management of the Partnership A-28
5.02 Authority of the Managing General Partner A-31
5.03 Authority of General Partner and Its Affiliates to
Deal with Partnership and Operating Partnerships A-34
5.04 General Restrictions on Authority of General Partner A-38
5.05 Management Obligations A-40
5.06 Delegation of Authority A-42
5.07 Other Activities A-42
5.08 Limitation on Liability of General Partner and
Assignor Limited Partner; Indemnification A-42
5.09 Tax Status of Partnership A-44
5.10 Fiduciary Duty; Derivative Action A-44
5.11 Agency Agreement A-45
5.12 Restrictions on Authority to Deal with General Partner and Affiliates A-45
5.13 Additional Restrictions on the General Partner A-45
5.14 Accounting Fee Advances A-46
5.15 Asset Acquisition Fee A-46
5.16 Partnership Management Fee A-47
</Table>
i
<Page>
<Table>
<Caption>
PAGE
----
ARTICLE VI
CHANGES IN GENERAL PARTNERS A-47
6.01 Withdrawal of the General Partner A-47
6.02 Admission of a Successor or Additional General Partner A-48
6.03 Consent of Assignees and Limited Partners to
Admission of Successor or Additional General Partner A-49
6.04 Removal of a General Partner A-49
6.05 Effect of Removal, Bankruptcy, Death, Withdrawal,
Dissolution or Incompetency of a General Partner A-49
ARTICLE VII
TRANSFERABILITY OF LIMITED PARTNERS' INTERESTS AND TRANSFERABILITY OF BACS A-50
7.01 Assignments of the Interest of the Assignor Limited Partner A-50
7.02 Conversion of BACs A-51
7.03 Assignees of Limited Partners; Substitute Limited Partners A-51
7.04 Joint Ownership of Interests A-52
7.05 Assignability of BACs A-52
ARTICLE VIII
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP A-53
8.01 Events Causing Dissolution A-53
8.02 Liquidation A-54
ARTICLE IX
BOOKS AND RECORDS, ACCOUNTING REPORTS, TAX MATTERS A-56
9.01 Books and Records A-56
9.02 Accounting Basis and Fiscal Year A-57
9.03 Bank Accounts A-57
9.04 Reports A-57
9.05 Section 754 Elections A-59
9.06 Designation of Tax Matters Partner A-59
9.07 Duties of Tax Matters Partner A-59
9.08 Authority of Tax Matters Partner A-59
9.09 Expenses of Tax Matters Partner A-60
ARTICLE X
MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS AND ASSIGNEES A-61
10.01 Meetings A-61
10.02 Voting Rights of Limited Partners and Assignees A-62
10.03 Voting by the Assignor Limited Partner on Behalf of BAC Holders A-64
10.04 Management of the Partnership A-65
10.05 Other Activities A-65
ARTICLE XI
ASSIGNMENT OF BENEFICIAL INTERESTS TO ASSIGNEES AND RIGHTS OF ASSIGNEES A-66
11.01 Assignment of Beneficial Interests to Assignees A-66
11.02 Rights of Assignees of the Assignor Limited Partner A-66
11.03 Fiduciary Duty of Assignor A-67
11.04 Preservation of Tax Status and Preservation of Partnership Status A-67
</Table>
ii
<Page>
<Table>
<Caption>
PAGE
----
ARTICLE XII
MISCELLANEOUS PROVISIONS A-68
12.01 Appointment of Managing General Partner as Attorney-in-Fact A-68
12.02 Signatures; Amendments A-69
12.03 Ownership by Limited Partners or Assignees of
General Partners or Its Affiliates A-70
12.04 Binding Provisions A-70
12.05 Applicable Law A-71
12.06 Counterparts A-71
12.07 Separability of Provisions A-71
12.08 Captions A-71
12.09 Disallowance of Expenses A-71
12.10 Entire Agreement A-71
12.11 Series Treated as Separate Partnerships; Exceptions A-71
</Table>
iii
<Page>
BOSTON CAPITAL TAX
CREDIT FUND V L.P.
AGREEMENT OF LIMITED PARTNERSHIP
RECITALS
Whereas, as of October 15, 2003, Boston Capital Associates V L.L.C., a Delaware
limited liability company (the "General Partner"), as the General Partner,
executed a Certificate of Limited Partnership (the "Certificate") forming a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
known as Boston Capital Tax Credit Fund V L.P. (the "Partnership"), which
Certificate was filed with the Delaware Secretary of State on October 15, 2003.
Whereas, the Partners of Boston Capital Tax Credit Fund V L.P. desire to (i) set
forth additional terms and conditions with respect to the Partnership, (ii) set
forth in full the terms and conditions of their agreements and understandings in
a single instrument, and (iii) continue the Partnership.
Now, Therefore, in consideration of the mutual promises made herein, the
parties, intending to be legally bound, agree to continue Boston Capital Tax
Credit Fund V L.P. as follows:
ARTICLE I
CONTINUATION, NAME, PLACE OF BUSINESS,
PURPOSE AND TERM
1.01. CONTINUATION OF PARTNERSHIP.
The undersigned hereby continue Boston Capital Tax Credit Fund V L.P. as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
(6 Del. C. (S) 17-101 ct seq.). To the extent that the laws of other
jurisdictions shall be applicable to the operations of the Partnership, the
Partnership is intended to be qualified as a foreign limited partnership or a
partnership in commendam under such laws.
1.02. NAME, PLACE OF BUSINESS AND NAME AND ADDRESS OF RESIDENT AGENT.
The name of the Partnership is Boston Capital Tax Credit Fund V L.P. The address
of the principal place of business and office of the Partnership is c/o Boston
Capital Corporation, One Boston Place, Suite 2100, Boston, Massachusetts 02108.
Notification of any change in the Partnership's place of business and principal
office shall be given to the Limited Partners and Assignees.
A-1
<Page>
The address of the registered office and the name and address of the registered
agent for service of process is The Corporation Trust Company, 1209 Orange
Street, Suite H 100, Wilmington, New Castle County, Delaware.
1.03. PURPOSE.
The purpose of the Partnership is to invest in real estate by acquiring,
holding, and disposing of limited partnership interests in Operating
Partnerships which will acquire, develop, rehabilitate, operate and own
newly-constructed, existing or rehabilitated Apartment Complexes and to engage
in other activities necessary or appropriate to the foregoing in order to:
(1) provide tax benefits in the form of Federal Housing Tax Credits and
Rehabilitation Tax Credits which may be applied, subject to certain strict
limitations, against federal income tax liability from active, portfolio
and/or passive income; provided, however, that with respect to any series of
certificates which will invest in Operating Partnerships generating State
Housing Tax Credits, the Partnership's objective will be to provide current
tax benefits in the form of Federal Housing Tax Credits, Rehabilitation Tax
Credits and State Housing Tax Credits;
(2) provide tax benefits in the form of passive losses which may be applied
to offset passive income (if any);
(3) preserve and protect the Partnership's capital and provide capital
appreciation and cash distributions from a Capital Transaction as to the
Partnership.
1.04. TERM.
The Partnership began as of October 15, 2003, and shall continue in full force
and effect until December 31, 2053, or until dissolution prior thereto pursuant
to the provisions hereof, and upon the filing of a Certificate of Cancellation
with the Delaware Secretary of State in accordance with Article VIII.
ARTICLE II
DEFINED TERMS
2.01. DEFINED TERMS.
The defined terms used in this Agreement shall, unless the context otherwise
requires, have the meanings specified in this Article II. The singular shall
include the plural and the masculine gender shall include the feminine and
neuter, and vice versa, as the context requires.
"ACCOUNTANTS" means Reznick Fedder & Silverman, of Bethesda, Maryland, or such
other nationally recognized firm of independent certified public accountants as
shall be engaged from time to time by the Managing General Partner on behalf of
the Partnership.
A-2
<Page>
"ACCOUNTING FEE" means the fee paid to the Accountants for the preparation of
the Partnership tax returns and the annual financial reports to the Partners.
"ACCOUNTING FEE ADVANCES" means any advances made by the General Partner to the
Partnership for payment of all or part of any Accounting Fee, as set forth in
Section 5.14.
"ACQUISITION EXPENSES" means including but not limited to, the total of all
legal fees and expenses, travel and communication expenses in connection with
negotiations, costs of real estate consultants and appraisals, engineering and
market studies, accountants' fees, title and recording fees, and miscellaneous
expenses, associated with the Partnership's acquisition of Operating Partnership
Interests and the Operating Partnerships' acquisition of Apartment Complexes,
whether or not acquired, including any expenses that may have been paid by an
Operating General Partner that will be reimbursed by the Partnership or included
in the acquisition price of the Apartment Complexes or Operating Partnership
Interests.
"ACQUISITION FEES" means the total of all fees and commissions paid by any party
in connection with the Partnership's acquisition of Operating Partnership
Interests (including the Asset Acquisition Fee) and in connection with the
Operating Partnerships' acquisition of Apartment Complexes, but excluding a
development fee paid to a Person who is not an Affiliate of the General Partner
in connection with the actual development of an Apartment Complex by an
Operating Partnership on or after acquisition of the Apartment Complex by the
Operating Partnership. Included in the computation of such fees or commissions
shall be any real estate fee, selection fee, development fee, nonrecurring
management fee or any fee of a similar nature, however designated. For the
purposes of this definition, development fee shall mean a fee for packaging of
an Apartment Complex, including negotiating and approving plans, and undertaking
to assist in obtaining zoning and necessary variances and necessary financing
for a specific Apartment Complex, either initially or at a later date.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as amended
from time to time during the term of the Partnership.
"ADJUSTED CAPITAL CONTRIBUTION" means the Capital Contribution of a Partner or
Assignee, as the context may require, which for purposes of this definition
shall be deemed to be $10 per certificate or Limited Partnership Interest
reduced (but not below zero) by any return of such Capital Contributions under
Section 3.04(c) and Section 3.04(d) and by any distribution of Liquidation, Sale
or Refinancing Proceeds which represent a return of such Capital Contribution.
"AFFILIATE" means, when used with reference to a specified Person, (i) any
Person that directly or indirectly controls or is controlled by or is under
A-3
<Page>
common control with the specified Person, (ii) any Person that is an officer of,
director of, partner in or trustee of, or serves in a similar capacity with
respect to, the specified Person or of which the specified Person is an officer,
director, partner or trustee, or with respect to which the specified Person
serves in a similar capacity, (iii) any Person that, directly or indirectly, is
the beneficial owner of 10% or more of any class of equity securities of the
specified Person or of which the specified Person is directly or indirectly the
owner of 10% or more of any class of equity securities, (iv) any Person who is
an officer, director, general partner, trustee or holder of 10% or more of the
voting securities or beneficial interests of any of the foregoing or (v) any
Person treated as a Controlling Person. An Affiliate of the Partnership or of a
General Partner does not include a Person who is a partner in a partnership or
joint venture with the Partnership or any other Affiliate of the Partnership if
such Person is not otherwise an Affiliate of the Partnership or a General
Partner. For purposes of this definition, the term "Affiliate" shall not be
deemed to include any law firm (or member or associate thereof) providing legal
services to the Partnership, the Managing General Partner or any Affiliate of
any of them.
"AGGREGATE COST" means the sum(s) of (i) any capital contributions anticipated
to be made by the Partnership to the Operating Partnerships, plus (ii) the
proportionate amount of the mortgage loans on, and other debts related to, the
Apartment Complexes, which proportionate amount is equal to the Partnership's
initial, pro rata interest in the profits, losses and credits of the Operating
Partnerships. The amount of the "Aggregate Cost" will be determined after the
completion of investment of Net Proceeds in the Operating Partnerships in
accordance with Section 5.04(q).
"AGREEMENT" means this Agreement of Limited Partnership, as originally executed
and as amended from time to time.
"APARTMENT COMPLEX" means the land and buildings comprising each of the
multifamily housing developments owned by the Operating Partnerships.
"ASSET ACQUISITION FEE" means the fee payable by the Partnership from Gross
Proceeds to the General Partner or its Affiliate(s) pursuant to Section 5.15,
for analyzing and evaluating potential investments in Operating Partnerships,
negotiating the terms of such investments and any miscellaneous activities
related to the selection of and investment in Operating Partnership Interests.
"ASSIGNEE" means any Person who has been assigned one or more units of
beneficial interest in the Limited Partnership Interest of the Assignor Limited
Partner, which assignment is represented by a certificate, but which Person is
not a Limited Partner.
A-4
<Page>
"ASSIGNMENT AGREEMENT" means an agreement pursuant to which the Assignor Limited
Partner assigns units of beneficial interest in its Limited Partnership Interest
to Assignees.
"ASSIGNOR LIMITED PARTNER" means BCTC V Assignor Corp., a Delaware corporation
which is an Affiliate of the General Partner.
"BAC" means the beneficial interest of an Assignee in the Limited Partnership
Interest of the Assignor Limited Partner, attributable to an original Capital
Contribution of $10.00 ($8.95 in the case of the General Partner, its Affiliates
and employees of its Affiliates).
"BAC HOLDER" means any Person who has been assigned one or more units of
beneficial interest in the Limited Partnership Interest of the Assignor Limited
Partner, which assignment is represented by a BAC, but which Person is not a
Limited Partner.
"BANKRUPTCY" or "Bankrupt" as to any Person means the filing of a petition for
relief as to any such Person as debtor or bankrupt under the Bankruptcy Code of
1978 or like provision of law (except if such petition is contested by such
Person and has been dismissed within 60 days); insolvency of such Person as
finally determined by a court proceeding; filing by such Person of a petition or
application to accomplish the same or for the appointment of a receiver or a
trustee for such Person or a substantial part of his assets; or commencement of
any proceedings relating to such Person under any other reorganization,
arrangement, insolvency, adjustment of debt or liquidation law of any
jurisdiction, whether now in existence or hereinafter in effect, either by such
Person or by another, provided that if such proceeding is commenced by another,
such Person indicates his approval of such proceeding, consents thereby or
acquiesces therein, or such proceeding is contested by such Person and has not
been finally dismissed within 60 days.
"BCS" means Boston Capital Services, Inc., a Massachusetts corporation which is
the Dealer-Manager and an Affiliate of the General Partner.
"BCSG" means BCS Group, Inc., a Massachusetts corporation and an Affiliate of
the General Partner.
"BOSTON CAPITAL" means Boston Capital Corporation, a Massachusetts corporation
and an Affiliate of the General Partner.
"CAPITAL ACCOUNT" means the separate capital account maintained and adjusted for
each Partner and the separate subaccount of the Capital Account of the Assignor
Limited Partner maintained and adjusted for each Assignee in accordance with the
terms of Section 4.05.
"CAPITAL CONTRIBUTION" means the total amount of money contributed to the
Partnership (prior to the deduction of any selling commissions or expenses) by
all the Partners or any class of Partners, or by any one Partner, as the
A-5
<Page>
context may require (or the predecessor holders of the Interests of such Persons
or Person), and with respect to the Assignees, the Capital Contribution of the
Assignor Limited Partner made on behalf of the Assignees.
"CAPITAL TRANSACTION" means the sale by the Partnership of all or part of its
Interest in an Operating Partnership, or any other transaction affecting the
Partnership, including the receipt by the Partnership of its share of the
proceeds of a Capital Transaction as to an Operating Partnership, which is not
in the ordinary course of the Partnership's business. As the context may
require, the term "Capital Transaction" shall, as to an Operating Partnership,
mean any transaction the proceeds of which are not includable in determining net
cash flow of the Operating Partnership, including, without limitation, the sale
or other disposition of all or substantially all the assets of such Operating
Partnership and any refinancing of the applicable Permanent Mortgage Loan, but
excluding the payment to such Operating Partnership of capital contributions of
the Partnership.
"CASH AVAILABLE FOR DISTRIBUTION" means, with respect to any period, Net Cash
Flow less any amounts set aside from Net Cash Flow for deposit into the Working
Capital Reserve.
"CASH FLOW" means Net Cash Flow plus amounts available each year for payment of
Accounting Fees, Accounting Fee Advances, reimbursement for Acquisition Expenses
and payment of the Partnership Management Fee, as set forth in Section 4.01(a).
"CAUSE" means, with respect to Section 5.08 and Section 5.13 hereof only,
conduct which constitutes fraud, bad faith, negligence, misconduct or breach of
fiduciary duty.
"CODE" means the Internal Revenue Code of 1986, as amended, or any corresponding
provision or provisions of succeeding law.
"CONSENT" means either the consent given by vote at a meeting called and held in
accordance with the provisions of Section 10.01 hereof or the prior written
consent, as the case may be, of a Person to do the act or thing for which the
consent is solicited, or the act of granting such consent, as the context may
require, subject to the provisions of Section 12.11.
"CONSTRUCTION FEE" means a fee or other remuneration for acting as general
contractor and/or construction manager to construct improvements, supervise and
coordinate projects or to provide major repairs or rehabilitation with respect
to an Apartment Complex.
"CONTROLLING PERSON" means any Person, whatever his title, who performs
functions for a General Partner or any Affiliate of a General Partner similar to
those of the Chairman or member of the Board of Directors, or executive officer
such as the President, Executive Vice President or Senior Vice President,
Corporate Secretary, or Treasurer, or any Person holding a 5% or more equity
interest in any General Partner, or any Person having the
A-6
<Page>
power to direct or cause the direction of a General Partner, whether through the
ownership of voting securities, by contract or otherwise.
"DEALER-MANAGER" means Boston Capital Services, Inc. ("BCS"), a Massachusetts
corporation which is an Affiliate of the General Partner.
"DEALER-MANAGER FEE" means the fee payable by the Partnership to the
Dealer-Manager for its services with respect to the Offering.
"DEVELOPMENT FEE" means a fee for packaging of an Apartment Complex, including
negotiating and approving plans, and undertaking to assist in obtaining zoning
and necessary variances and necessary financing for a specific Apartment
Complex, either initially or at a later date.
"ESCROW AGENT" means Wainwright Bank & Trust Co., Boston, Massachusetts, in its
capacity as such.
"FEDERAL HOUSING TAX CREDIT" means the low income housing tax credit allowed for
low income housing developments pursuant to Section 42 of the Code.
"FRONT END FEES" means fees and expenses paid by any party for any services
rendered during and in connection with the Partnership's organizational or
acquisition phase, including Acquisition Fees, Acquisition Expenses,
Organization and Offering Expenses, plus Selling Commissions and any other
similar fees, although none are anticipated, however designated by the General
Partner. For purposes of this definition, "Acquisition Fees" means the total of
all fees and commissions paid by any party in connection with the Partnership's
acquisition of Operating Partnership Interests (including the Asset Acquisition
Fee, payable by the Partnership from Gross Proceeds to the General Partner or
its Affiliate(s) pursuant to Section 5.15 hereof) and in connection with the
Operating Partnerships' acquisition of Apartment Complexes, but excluding
development fees paid to Persons who are not Affiliates of the Sponsor in
connection with the actual development of Apartment Complexes by Operating
Partnerships. Included in the computation of such fees or commissions shall be
any real estate fee, selection fee, nonrecurring management fee or any fee of a
similar nature, however designated. For purposes of this definition,
"Acquisition Expenses" means including but not limited to, the total of all
legal fees and expenses, travel and communication expenses in connection with
the negotiations, costs of real estate consultants and appraisals, engineering
and market studies, accountants' fees, title and recording fees and
miscellaneous expenses, associated with the Partnership's acquisition of
Operating Partnership Interests and the Operating Partnerships' acquisition of
Apartment Complexes, whether or not acquired, including any expenses that may
have been paid by an Operating General Partner that will be reimbursed by the
Partnership or included in the purchase price of the Apartment Complexes or
Operating Partnership Interests.
A-7
<Page>
"GENERAL PARTNER(S)" means Boston Capital Associates V L.L.C., or, as
applicable, any Person(s) who, at the time of reference thereto, has been
admitted as a successor to its Partnership Interest or as an additional General
Partner, in each such Person's capacity as a General Partner. During such time
as Boston Capital Associates V L.L.C., or any successor to the Interest of
Boston Capital Associates V L.L.C., shall be the sole general partner of the
Partnership, the terms "General Partner(s)" and "Managing General Partner" shall
be deemed to be identical in meaning and may be employed interchangeably in this
Agreement.
"GOVERNMENT ASSISTANCE" means any form of local, state or federal assistance,
including, without limitation, mortgage insurance, rental assistance payments,
permanent mortgage financing, interest reduction payments, bond financing, Tax
Credits, State Housing Tax Credits or any other form of loan, grant, insurance
or guarantee.
"GROSS PROCEEDS" means the total amount of money contributed to the Partnership
by the Assignor Limited Partner, which amount will be equal to (i) $10 times the
aggregate number of BACs sold to BAC Holders other than (to the extent
applicable) the General Partner, its Affiliates and employees of its Affiliates
pursuant to the Offering, plus (ii) $8.95 times the aggregate number of BACs
sold to the General Partner, its Affiliates and employees of its Affiliates
pursuant to the Offering.
"INTEREST" or "Partnership Interest" means the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled under this
Agreement and the Delaware Revised Uniform Limited Partnership Act, together
with the obligations of such Partner to comply with all the terms and provisions
of this Agreement. Reference to a majority, or specified percentage, in interest
of the Limited Partners means, subject to the provisions of Section 12.11 with
respect to matters applicable to any particular series of certificates, the
Limited Partners (including the Assignor Limited Partner) whose combined Capital
Contribution represents over 50%, or such specified percentage, respectively, of
the Capital Contribution of all Limited Partners. The ownership interests of the
Limited Partner(s) in the Partnership are sometimes referred to herein as
"Limited Partnership Interest(s)."
"INVESTMENT IN PROPERTIES" means the amount of Capital Contributions actually
paid or allocated to Operating Partnership Interests acquired by the Partnership
(including the purchase of such properties, Working Capital Reserves allocable
thereto (except that Working Capital Reserves in excess of 5% shall not be
included), and other cash payments such as interest and taxes, but excluding
Front-End Fees).
"INVESTMENT DATE" means the date or dates, from time to time, when the proceeds
of the Offering are released from the Escrow Agent to the
A-8
<Page>
Partnership through the Assignor Limited Partner (on behalf of the Assignees)
and upon the satisfaction of the conditions described in Sections 3.02 and 3.03.
"LIMITED PARTNER" means any Person who is a Limited Partner, whether the
Assignor Limited Partner, a Substitute Limited Partner, or a former Assignee or
General Partner whose Partnership Interest has been converted into a Limited
Partnership Interest, at the time of reference thereto, in such Person's
capacity as a Limited Partner of the Partnership.
"LIMITED PARTNERSHIP INTEREST" means the Interest held by a Limited Partner,
including the Interest held by the Assignor Limited Partner the beneficial
interest of which is assigned to the Assignees.
"LIQUIDATOR" means the General Partner, or, if there is none at the time in
question, such other Person who may be appointed in accordance with applicable
law who shall be responsible to take all action related to the winding up and
distribution of assets of the Partnership.
"LIQUIDATION, SALE OR REFINANCING PROCEEDS" means (a) the gross proceeds (i)
resulting from the liquidation of Partnership assets, (ii) received by the
Partnership from an Operating Partnership as a result of the occurrence of a
Capital Transaction as to such Operating Partnership, (iii) resulting from any
sale of the Interest of the Partnership in any Operating Partnership, and/or
(iv) resulting from any other Capital Transaction, less (b) in the case of (i),
(ii) and (iii) immediately above, the expenses of the Partnership incident to
such Capital Transaction, before any application or distribution of such
proceeds pursuant to this Agreement.
"MANAGING GENERAL PARTNER" means Boston Capital Associates V L.L.C., in its
capacity as a General Partner, so long as it shall be a General Partner, or any
successor to the Interest of Boston Capital Associates V L.L.C., or a General
Partner who becomes Managing General Partner pursuant to Section 8.01(a) upon
the removal of the former Managing General Partner. During such time as Boston
Capital Associates V L.L.C., or any successor to the Interest of Boston Capital
Associates V L.L.C., shall be the sole general partner of the Partnership, the
terms "Managing General Partner" and "General Partner(s)" shall be deemed to be
identical in meaning and may be employed interchangeably in this Agreement.
"NASAA GUIDELINES" means the Statement of Policy Regarding Real Estate Programs
adopted by the North American Securities Administrators Association, Inc., as in
effect on the date of the Prospectus.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"NET CASH FLOW" means, with respect to any year or applicable period, (a) all
Revenues received by the Partnership during such period (not including
depreciation), plus (b) any amounts which the Managing General
A-9
<Page>
Partner releases from the Working Capital Reserve (other than amounts placed in
the Working Capital Reserve from Net Offering Proceeds) as being no longer
necessary to hold as part of the Working Capital Reserve, less (i) cash funds
used to pay operating expenses of the Partnership paid from Revenues during the
period, including any expenses paid to the Managing General Partner, but not
including such amounts paid from the Working Capital Reserve, (ii) all cash
payments made from Revenues during such period to discharge Partnership
indebtedness, and (iii) all amounts from Revenues, if any, added to the Working
Capital Reserve during such period.
"NET PROCEEDS" means the Gross Proceeds less expenses incurred by the
Partnership in connection with its organization and the offering and sale of
BACs, including Selling Commissions.
"NON-PROFIT OPERATING PARTNERSHIP" means an Operating Partnership which has a
non-profit sponsor as its Operating General Partner, and as to which certain
limitations or restrictions on the distribution of Cash Flow and/or Liquidation,
Sale or Refinancing Proceeds may apply.
"NOTICE" means a writing, containing the information required by this Agreement
to be communicated to any Person, personally delivered to such Person or sent by
registered, certified or regular mail, postage prepaid, to such Person at the
last known address of such Person. The date of personal delivery or the date of
mailing thereof, as the case may be, shall be deemed the date of receipt of
Notice.
"OFFERING" means the offering of BACs by the Partnership pursuant to the terms
and conditions described in the Prospectus.
"OPERATING EXPENSES" means, with respect to any period, except to the extent
paid with cash withdrawn from the Working Capital Reserve therefor, the amount
of expenses incurred by the Partnership in such period in the ordinary course of
the Partnership's business for all expenses, including, but not by way of
limitation, computer costs, advertising, promotion, management, salaries,
insurance, brokerage fees, taxes, accounting, bookkeeping, legal, travel and
telephone. Operating Expenses may include reimbursement to the General Partner
and its Affiliates for the administrative services necessary to the prudent
operation of the Partnership and the management of its investments, provided
that any such reimbursement shall be at the lower of the General Partner's
actual cost or the amount the Partnership would be required to pay to
independent parties for comparable administrative services in the same
geographic location; provided, however, that the General Partner or its
Affiliates may not be reimbursed for rent or depreciation, utilities, capital
equipment, other administrative expenses or salaries or fringe benefits incurred
by or allocated to any of their controlling persons (as defined in Section
V.E.1. of the NASAA Guidelines).
A-10
<Page>
"OPERATING GENERAL PARTNER" means with respect to an Operating Partnership, the
general partner(s) under its Operating Partnership Agreement.
"OPERATING PARTNERSHIP" means each of the limited partnerships or limited
liability companies owning an Apartment Complex in which the Partnership invests
as a limited partner or member, as applicable, which Apartment Complexes are
expected to be qualified pursuant to Section 42(g) of the Code.
"OPERATING PARTNERSHIP AGREEMENT" means the limited partnership agreement or
operating agreement, as applicable, of each of the Operating Partnerships, as
amended from time to time.
"OPERATING PARTNERSHIP INTEREST" means the ownership interest of the Partnership
in an Operating Partnership at any particular time, including the right of the
Partnership to any and all benefits to which the Partnership may be entitled as
provided in the applicable Operating Partnership Agreement.
"OPERATING PARTNERSHIP MANAGEMENT FEE" means the fee paid to a Person providing
partnership management services to an Operating Partnership.
"ORGANIZATIONAL AND OFFERING EXPENSES" means those expenses incurred in
connection with or related to the formation and qualification of the
Partnership, the structuring of the Partnership's investments, the registration
and qualification of the BACs under applicable federal and state laws and the
marketing, advertising, distribution, sale and processing of the certificates
including without limitation: (a) the costs of preparing, printing, filing and
delivering a registration statement with respect to the BACs, the Prospectus
(including any amendments thereof or supplements thereto), a "Blue Sky Survey"
and all underwriting and sales agreements, including the cost of all copies
thereof supplied to the Dealer-Manager and the Soliciting Dealers, (b) the cost
of preparing and printing this Agreement, other solicitation material and
related documents and the cost of filing and recording such BACs or other
documents as are necessary to comply with the laws of the State of Delaware for
the formation of a limited partnership and thereafter for the continued good
standing of a limited partnership, (c) the cost of any escrow arrangements,
including any compensation to the Escrow Agent, (d) filing fees payable to the
Securities and Exchange Commission, to state securities commissions and to the
National Association of Securities Dealers, Inc., (e) fees of the Partnership's
counsel and Accountants, and (f) the Dealer-Manager Fee, a non-accountable
expense allowance of up to $0.10 per BAC and an accountable due diligence
expense reimbursement of up to $0.05 per BAC, payable to the Dealer-Manager.
"PARTNER" means any General Partner or any Limited Partner.
A-11
<Page>
"PARTNERSHIP" means the limited partnership formed as of October 15, 2003, under
the Act and known as Boston Capital Tax Credit Fund V L.P., as said limited
partnership may from time to time be constituted.
"PARTNERSHIP MANAGEMENT FEE" means the annual fee for Partnership management
services payable pursuant to Section 5.16 to the General Partner or its
Affiliate; the Partnership Management Fee is defined in the Prospectus as the
"Fund Management Fee".
"PERMANENT MORTGAGE LOAN" means with respect to an Operating Partnership, the
permanent mortgage loan to be made to the Operating Partnership by a permanent
mortgage lender, and which will be secured by a mortgage or deed of trust and
other related security documents and financing statements.
"PERMITTED TEMPORARY INVESTMENTS" means investments in short-term, highly liquid
investments, including, without limitation, debt securities or money market
funds which invest in debt securities.
"PERSON" means any individual, partnership, corporation, joint venture, trust or
other legal entity.
"PURCHASE PRICE" means the price paid upon the purchase or sale of a particular
property, including the amount of Acquisition Fees and all liens and mortgages
on the property, but excluding points and prepaid interest.
"PRIORITY RETURN" means an amount equal to the amount, if any, by which (i) the
Priority Return Base as to a particular series, exceeds (ii) the aggregate
amount of cash, Tax Credits and State Housing Tax Credits, where applicable,
actually distributed or allocated by the Partnership to the Assignees and
Limited Partners as to such series, for each BAC as signed to the Assignees and
Limited Partners as to such series, in each case on a cumulative basis to the
date of a Capital Transaction as to such series of the Partnership.
"PRIORITY RETURN BASE" means an aggregate amount of cash, Tax Credits and State
Housing Tax Credits, where applicable, to be distributed and allocated by the
Partnership to the Assignees and Limited Partners as to a particular series, per
year during the holding period(s) of the investments of such series, for each
BAC assigned to the Assignees and Limited Partners as to such series, expressed
as a percentage of the Capital Contributions of such BAC Holders and Limited
Partners, as set forth in a supplement to the Prospectus at the time of the
commencement of the applicable Series Offering Period. The Priority Return Base
shall never be less than 6%, the calculation of which shall commence no later
than the end of the calendar quarter in which a Capital Contribution is made.
"PROFITS, CREDITS AND LOSSES" means the income or loss of the Partnership for
federal income tax purposes, as computed in accordance with the requirements of
Section 704(b) of the Code, including related tax items
A-12
<Page>
such as tax credits, capital gains and losses, tax preferences and recapture,
but excluding any gains or losses arising from a Capital Transaction as to an
Operating Partnership or the Partnership.
"PROSPECTUS" means any prospectus contained in a the registration statement,
filed with the Securities and Exchange Commission for the registration of BACs
and/or Limited Partnership Interests under the Securities Act of 1933, in the
final form in which said prospectus is filed with said Commission and as
thereafter supplemented pursuant to Rule 424 under said Act.
"REGULATIONS" means the regulations promulgated by the U.S. Department of the
Treasury pursuant to the Code.
"REHABILITATION TAX CREDIT" means the historic rehabilitation tax credit allowed
for the rehabilitation of certified historic structures pursuant to Section 47
of the Code.
"REPORTING FEE" means the fee to be paid to an Affiliate of the General Partner
by the Operating Partnerships for services in connection with preparing reports
regarding the Operating Partnerships.
"REPURCHASE EVENT" means an event pursuant to which an Operating General Partner
will be required, at the direction of the General Partner on behalf of the
Partnership, to repurchase the Interest of the Partnership in the applicable
Operating Partnership.
"REVENUES" means all cash receipts of the Partnership during any period except
for Capital Contributions, Liquidation Sale or Refinancing Proceeds or the
proceeds of any loan to the Partnership.
"ROLL-UP" means (i) a transaction involving the acquisition, merger, conversion,
consolidation, or reorganization of the Fund and the issuance of securities of a
Roll-Up Entity; or (ii) any change in the rights, preferences or privileges of
Partners or BAC Holders in the Fund; or any change that would have the effect
of:
A) materially changing the amount, terms or conditions of promoter or General
Partner compensation;
B) amending the voting rights of the BAC Holders;
C) listing the Fund on a national securities exchange, or on the Automated
Quotation System of the National Association of Securities Dealers;
D) changing the fundamental investment objectives of the Fund;
E) materially altering the duration of the Fund.
"ROLL-UP ENTITY" means a limited partnership, real estate investment trust,
corporation, business trust, or other entity that would be created or would
survive after the successful completion of a proposed Roll-Up transaction.
"SCHEDULE A" means the schedule(s), as may be amended from time to time, of
Partners' names, addresses, Capital Contributions and Interest
A-13
<Page>
(expressed as a percentage of all Partners' Interests), which schedule, in its
initial form, is attached hereto and made a part hereof.
"SELLING COMMISSIONS" means the selling commissions payable to the
Dealer-Manager, in connection with the Offering, all or a portion of which may
be reallowed to the Soliciting Dealers.
"SOLICITING DEALER" means any of the participating soliciting dealers assisting
the Dealer-Manager in the sale of the BACs.
"SPONSOR" means any Person directly or indirectly instrumental in organizing,
wholly or in part, the Partnership, and any Affiliate of such Person, but does
not include (a) any Person whose only relationship with the Partnership or the
General Partner is that of an independent property manager whose only
compensation from the Partnership is in the form of fees for the performance of
property management services, or (b) wholly independent third parties such as
attorneys, accountants and underwriters whose only compensation from the
Partnership is for professional services rendered in connection with the
Offering or the operations of the Partnership. A Person may also be a Sponsor
by: (i) taking the initiative, directly or indirectly, in founding or organizing
the business or enterprise of the Partnership, either alone or in conjunction
with one or more Persons, (ii) receiving a material participation in the
Partnership in connection with the founding or organizing of the business of the
Partnership, in consideration of services or property, or both services and
property, (iii) having a substantial number of relationships and contacts with
the Partnership, (iv) possessing significant rights to control the Partnership's
properties or (v) receiving fees for providing services to the Partnership which
are paid on a basis that is not customary in the industry.
"SUBSTITUTE LIMITED PARTNER" means any Person admitted to the Partnership as a
Limited Partner pursuant to the provisions of Section 7.03.
"STATE HOUSING TAX CREDIT" means a low-income housing tax credit allowed against
state income tax liability pursuant to the applicable laws of a state.
"TAX CREDIT" means the Federal Housing Tax Credit and, as applicable, the
Rehabilitation Tax Credit.
"TAX MATTERS PARTNER" means the Partner designated as the Tax Matters Partner of
the Partnership by the Managing General Partner pursuant to the provisions of
Section 9.06.
"WORKING CAPITAL RESERVES" means funds held in reserve, anticipated to be
initially established in an amount of 4% of Gross Offering Proceeds, to be
available for contingencies relating to the operation, management and
administration of the Apartment Complexes, the Operating Partnerships, and the
Partnership, including payment of the annual Partnership Management Fee. In
addition, funds held in the Working Capital Reserve will also
A-14
<Page>
be available for option and/or other payments which may be necessary to secure
the acquisition of Operating Partnership Interests. Amounts held in the Working
Capital Reserve may at any time, in the discretion of the General Partner, be
added to Net Cash Flow or Liquidation, Sale or Refinancing Proceeds.
ARTICLE III
PARTNERS AND CAPITAL
3.01. GENERAL PARTNER.
The General Partner is Boston Capital Associates V L.L.C. The name, address and
Capital Contribution of the General Partner is as set forth in Schedule A. The
General Partner shall not be required to make any additional Capital
Contributions to the Partnership. The Interest of the General Partner is 0.25%.
3.02. LIMITED PARTNER.
The Assignor Limited Partner is BCTC V Assignor Corp. The name, address and
Capital Contribution of the Assignor Limited Partner is as set forth in Schedule
A. The Interest of the Assignor Limited Partner is 99.75%.
On the first Investment Date of the first series of BACs, the Partnership shall
redeem the initial Capital Contribution of the Assignor Limited Partner and the
Assignor Limited Partner shall make a Capital Contribution to the Partnership
equal to the proceeds from the issuance of the BACs closed and released on such
Investment Date.
The Managing General Partner and the Assignor Limited Partner shall authorize
and cause the Escrow Agent to transfer to the Partnership all proceeds (less a
Dealer-Manager Fee in the amount of 2% of Gross Proceeds, an accountable due
diligence expense reimbursement to the Dealer-Manager in the amount of up to
0.5% of Gross Proceeds, a non-accountable expense allowance to the
Dealer-Manager in the amount of up to 1% of Gross Proceeds and Selling
Commissions to the Dealer-Manager and/or other selected broker-dealers in the
amount of 7% of Gross Proceeds (less any applicable quantity discount with
respect to the Selling Commissions), which Dealer-Manager Fee, due diligence
reimbursement, expense allowance and Selling Commissions shall not be payable by
the General Partner or its Affiliates or employees of its Affiliates with
respect to BACs purchased by them) received from Persons who purchased BACs
pursuant to the Offering, and all such proceeds transferred by the Assignor
Limited Partner shall be treated as Capital Contributions to the Partnership
made by the Assignor Limited Partner on behalf of, and as nominee for, the
Assignees. The Assignor Limited Partner shall make
A-15
<Page>
additional Capital Contributions on each Investment Date thereafter (if any)
equal to the additional proceeds from the issuance of BACs released on each
applicable Investment Date. The Assignor Limited Partner shall not be required
to make any additional Capital Contribution to the Partnership. Other than to
serve as Assignor Limited Partner, the Assignor Limited Partner has no other
business purpose and will not engage in any other activity or incur any debts.
The Assignor Limited Partner may not withdraw from the Partnership without the
Consent of all Persons who are then Assignees.
3.03. ASSIGNEES.
(a) On each Investment Date, the Assignor Limited Partner is authorized and
directed to issue BACs to the Assignees representing the assignment of
beneficial interests in the Limited Partnership Interest of the Assignor Limited
Partner to the Assignees, provided, however, that not fewer than 250,000 BACs
and not more than 75,000,000 BACs (including all BACs previously sold in any
series as of such Investment Date) may be issued and sold. Any BACs sold to the
General Partner and/or its Affiliates shall not be included in the calculation
of the minimum amount of BACs in any series. It is hereby understood and agreed
that the Assignor Limited Partner shall assign such BACs to other Persons, as
may be provided in an Assignment Agreement executed among the Partnership, the
Managing General Partner, and the Assignor Limited Partner on its own behalf and
on behalf of the Assignees, in connection with the Offering. A Person shall be
eligible to become an Assignee at such time as he has (1) agreed to purchase a
minimum investment of 500 or more BACs, (2) paid the sum of $10.00 in cash (less
any applicable quantity discount with respect to the Selling Commission) for
each BAC purchased ($8.95 in the case of the General Partner, its Affiliates and
employees of its Affiliates), and (3) obtained the consent of the Managing
General Partner or its designee to such purchase and assignment, the granting or
denial of which shall be within the absolute discretion of the Managing General
Partner. Each BAC shall represent one Unit of beneficial interest in the Limited
Partnership Interest of the Assignor Limited Partner. Purchasers of certain
numbers of BACs may receive quantity discounts with respect to Selling
Commissions. The offering of BACs in each series will not exceed 12 months, or
such lesser period as may be determined by the General Partner, in its sole
discretion.
(b) Payment for all orders for BACs shall be received by the Partnership in
trust and deposited in an escrow account with the Escrow Agent. Upon acceptance
by the Managing General Partner of orders for at least 250,000 BACs, the Escrow
Agent shall release Gross Proceeds (less Selling Commissions and other
compensation payable to the Dealer-Manager), to the Partnership, and the Persons
whose payments have been so closed and released shall become Assignees no later
than the next business day after
A-16
<Page>
the date of such release. Such funds as shall be received by the Partnership
shall be contributed to the capital of the Partnership and the Capital Account
of the Assignor Limited Partner (and therefore, the subdivided Capital Accounts
of the Assignees). Thereupon, the Assignees shall be credited on the books and
records of the Partnership with such Capital Contributions. The Persons holding
such BACs shall be recognized as Assignees with all the rights attendant thereto
under this Agreement no later than the next business day after the date of
release of funds from the escrow account.
After the initial Investment Date, prospective Assignees whose orders or
subscriptions are approved by the Managing General Partner shall, to the extent
feasible, be treated as Assignees as of the close of business on the business
day following the day the Partnership receives such Person's Capital
Contribution. All monies paid by Persons whose orders are rejected by the
Managing General Partner shall be returned by the Escrow Agent to such
subscribers, without interest, within 10 days after such rejection. In any
event, prospective Assignees shall be treated as Assignees not later than the
last day of the calendar month following the date upon which their subscriptions
were accepted by the General Partner. The Managing General Partner shall have
thirty (30) days to accept the subscription of any Person.
The aggregate interest of the Assignees (through the Assignor Limited Partner)
shall be 99.75% of the Partnership Interests. The aggregate interest of each
Assignee in the Partnership shall be determined in accordance with a ratio which
shall be multiplied by 99.75%. That ratio shall be determined as follows: the
numerator shall be the number of BACs owned by each Assignee; the denominator
shall be the total number of BACs owned by all Assignees.
(c) The Managing General Partner is hereby authorized to do all things necessary
to accomplish the purpose of this Section 3.03, including, but not limited to,
registering the BACs under the Securities Act of 1933, as amended, pursuant to
the rules and regulations of the Securities and Exchange Commission, qualifying
the BACs for sale with state securities regulatory authorities, perfecting
exemptions upon such terms and conditions as the Managing General Partner may
deem advisable, and entering into an agency agreement with the Dealer-Manager on
behalf of the Partnership.
(d) Immediately upon the release by the Escrow Agent of funds of prospective
Assignees and the delivery of such funds to the Partnership, the Assignor
Limited Partner shall be credited on the books and records of the Partnership
with additional Capital Contributions in the amount of such orders, and its
initial Capital Contribution will be returned. On each Investment Date, an
Assignment Agreement between the Partnership and
A-17
<Page>
the Assignor Limited Partner (as a Limited Partner of the Partnership and on
behalf of the Assignees) shall be executed to reflect the number of BACs
purchased by Assignees. The Assignor Limited Partner's rights and interest in
such Limited Partnership Interests shall be deemed to have been transferred and
assigned to the Assignees in accordance with Section 11.01.
(e) The name, address and Capital Contribution of any Limited Partner (other
than the Assignor Limited Partner) shall be set forth in a schedule to this
Agreement at such times as such other Limited Partners may be admitted hereto
pursuant to Sections 7.02, 7.03 or 11.04.
(f) A creditor who makes a nonrecourse loan to the Partnership shall not have or
acquire at any time, as a result of making the loan, any direct or indirect
interest in the profits, capital or property of the Partnership, other than as a
creditor or secured creditor, as the case may be.
(g) The Partnership may sell BACs aggregating not more than 15% of the total
BACs authorized for sale in any series directly to either the General Partner or
any Affiliate of the General Partner or employees of such Affiliates. Any BACs
acquired by the General Partner or its Affiliates will be on the same terms and
conditions as other Investors, except that they will not pay the 7% Selling
Commissions, the 2% Dealer-Manager Fee, the non-accountable expense allowance of
up to 1% or the accountable due diligence expense reimbursement of up to 0.5%
otherwise payable to the Dealer-Manager.
(h) All interest income earned on Offering proceeds prior to the date the
Offering proceeds are released to the Partnership on behalf of the Assignor
Limited Partner pursuant to this Section 3.03 shall be allocated and paid solely
to Assignees, within 75 days of the end of the fiscal quarter following the
applicable Investment Date, in the amount earned by their respective shares of
Offering proceeds, less any escrow fees and expenses, and the General Partner
shall not receive any portion of such interest income.
3.04. PARTNERSHIP CAPITAL.
(a) No Partner or Assignee shall be paid interest on any Capital Contribution;
provided, however, that if no assignments are made from the Assignor Limited
Partner to the Assignees, subscription proceeds shall be returned to the
Assignees with a pro rata portion of any interest earned thereon.
(b) The Partnership shall not redeem or repurchase any Partnership Interest or
BAC, and no Partner or Assignee shall have the right to withdraw, or receive any
return of, his Capital Contribution, except as specifically provided herein. No
Capital Contribution may be returned in the form of property other than cash or
cash equivalents. The General Partner shall
A-18
<Page>
have no personal liability for the repayment of the Capital Contribution of any
Limited Partner or Assignee. Nothing in this Section 3.04 shall alter the
limitation on liability of the General Partner or its Affiliates pursuant to
Section 5.08(a).
(c) Any portion of the Capital Contributions of the Assignees with respect to
the first series of BACs (except for any amounts utilized to pay Partnership
Operating Expenses, or Organizational and Offering Expenses, or any amounts set
aside for the Working Capital Reserve) which is not invested or committed for
investment in Operating Partnership Interests within 24 months from the date the
Prospectus is declared effective by the Securities and Exchange Commission (or,
with respect to Capital Contributions of the Assignees of subsequent series of
BACs, if any, 24 months from the commencement of such series offering(s))
(subject to the Partnership's authority to substitute Operating Partnership
Interests for previously- committed investments in Operating Partnership
Interests) shall be distributed to the Assignees by the Partnership as a return
of capital, without reduction for any Selling Commission paid with respect to
such Capital Contributions by the Partnership to the Dealer-Manager or the
Soliciting Dealers and subject to the provisions of Section 5.15 of this
Agreement relating to the return of a pro rata portion of the Asset Acquisition
Fee. For the purpose of this Agreement, funds will be deemed to have been
committed for investment in Operating Partnership Interests and will not be
returned to the Assignees to the extent such funds are deposited in the Working
Capital Reserve or to the extent that written agreements in principle,
commitment letters, letters of intent or understanding, option agreements or any
similar contracts or understandings with respect to such investments shall be at
any time executed, and as to which some portion of the funds have been invested.
Any return of Capital Contributions previously made by the Partnership to the
Operating Partnerships during the first 24 months after the making of such
Capital Contributions, and any other funds which have been earned or returned to
the Partnership with respect to Operating Partnership Interests and any
Liquidation, Sale or Refinancing Proceeds otherwise received within 36 months
from the Partnership's acquisition of Operating Partnership Interests shall, in
the discretion of the Managing General Partner, be invested in additional
Operating Partnership Interests, placed in the Working Capital Reserve or
returned to the Assignees in proportion to their respective Capital Accounts as
a return of capital, provided that in no event shall the Managing General
Partner make any reinvestments in Operating Partnership Interests later than 36
months from the final Investment Date. Any such funds which are not so invested
or placed in the Working Capital Reserve as permitted by the preceding sentence
within six months of the completion of the construction period of all of the
Apartment Complexes owned by the Operating Partnerships shall be returned to
Assignees in proportion to
A-19
<Page>
their respective Capital Accounts as a return of capital; provided, further,
that a sufficient portion of such funds shall be distributed to Assignees and
Limited Partners to cover their estimated income tax liabilities, if any,
arising out of the receipt of such funds.
(d) Any return of capital under this Section 3.04 shall be deemed to be a
compromise within the meaning of Section 17-502(b) of the Delaware Revised
Uniform Limited Partnership Act and Assignees receiving any such return shall
not be obligated to return any such money to the Partnership or a creditor of
the Partnership.
3.05. LIABILITY OF PARTNERS AND ASSIGNEES.
The liability of each Limited Partner or Assignee for the losses, debts,
liabilities and obligations of the Partnership shall be limited to his Capital
Contribution (or, in the case of Assignees, the Capital Contribution made on his
behalf) and his share of any undistributed profits of the Partnership; provided,
however, that under applicable law a Limited Partner or Assignee may be liable
to the Partnership to the extent of previous distributions made to him, with
interest, if the Partnership does not have sufficient assets to discharge its
liabilities. No Limited Partner or Assignee shall be required to lend any funds
to the Partnership or, after his Capital Contribution (or, in the case of
Assignees, the Capital Contribution made on his behalf) has been paid pursuant
to Section 3.03, to make any further Capital Contribution to the Partnership. It
is the intent of the Partnership that, for purposes of establishing liability of
the Limited Partners and Assignees as discussed in this Section 3.05, no
distribution (or any part of any distribution) made to any Limited Partner or
Assignee pursuant to Section 4.01 of this Agreement shall be deemed a return or
withdrawal of capital, and that no Limited Partner or Assignee shall be
obligated to pay any such amount to or for the account of the Partnership or any
creditor of the Partnership. If any court of competent jurisdiction holds,
however, that, notwithstanding the provisions of this Agreement, any Limited
Partner or Assignee is obligated to make any such payment, such obligation shall
be the obligation of such Limited Partner or Assignee and not of the General
Partner. To the extent that the Assignor Limited Partner is required to return
any distributions or repay any amount by law or pursuant to this Section 3.05,
each Assignee who has received any portion of such distribution agrees, by
virtue of accepting such distribution, to pay his proportionate share of such
amount to the Assignor Limited Partner immediately upon Notice by the Assignor
Limited Partner to such Assignee. To the extent that any Limited Partner or
Assignee fails to return such distribution to the Partnership, the Managing
General Partner may withold further distributions to such Limited Partner or
Assignee as an offset. In the event that the Assignor Limited Partner is
determined to have unlimited liability for the debts of the Partnership, nothing
set forth herein shall be construed to require Assignees to assume any portion
of such liability.
A-20
<Page>
ARTICLE IV
DISTRIBUTIONS OF CASH; ALLOCATIONS OF PROFITS,
CREDITS AND LOSSES
4.01. ALLOCATIONS OF PROFITS, CREDITS AND LOSSES AND DISTRIBUTIONS OF CASH
AVAILABLE FOR DISTRIBUTION.
(a) Prior to the initial Investment Date, any Profits, Credits and Losses and
any Cash Available for Distribution will be specially allocated to the General
Partner, determined on the basis of an interim closing of the Partnership's
books on that date. Thereafter, all Profits, Credits and Losses and all Cash
Available for Distribution, after payment of Accounting Fees, reimbursement to
the General Partner of payments to the Accountants for the preparation of
Partnership tax returns and other reports, reimbursement to the General Partner
and its Affiliates for any unreimbursed Acquisition Expenses, and payment of the
Partnership Management Fee, shall be allocated and distributed 99.25% to the
Assignees and Limited Partners as a group, and 0.25% to the General Partner,
annually; provided that the distributions of cash to the General Partner
pursuant to this subparagraph (a) shall be subordinated to the Priority Return.
(b) Distributions of Cash Available for Distribution, if any, shall be made
annually, within 180 days after the end of the annual period to which they
relate every calendar year.
(c) In the event that the deduction of all or a portion of any fee paid or
incurred out of Cash Flow or Net Cash Flow by the Partnership to a Partner or an
Affiliate of a Partner is disallowed for federal income tax purposes by the
Internal Revenue Service with respect to a taxable year of the Partnership, the
Partnership shall then allocate to such Partner an amount of gross income of the
Partnership for such year equal to the amount of such fee as to which the
deduction is disallowed.
(d) In accordance with Section 704(c) of the Code (relating to allocations with
respect to appreciated contributed property) and the Regulations thereunder,
income, gain, loss, and deduction with respect to any property contributed to
the capital of the Partnership shall be allocated, solely for tax purposes,
among the Partners and Assignees so as to take account of any variation between
the adjusted basis of such property to the Partnership for federal income tax
purposes and its fair market value. Any elections or other decisions relating to
such allocations shall be made by the General Partner in any manner that
reasonably reflects the purpose and intention of this Agreement.
A-21
<Page>
4.02. DISTRIBUTIONS OF LIQUIDATION, SALE OR REFINANCING PROCEEDS.
(a) Except as may be required by Section 8.02(c), all Liquidation, Sale or
Refinancing Proceeds shall be applied and distributed in the following amounts
and order of priority:
(i) to the payment of debts and liabilities of the Partnership (including any
expenses of the Partnership incident to any such liquidation, sale or
refinancing of an Apartment Complex or of the Partnership's interest in an
Operating Partnership), excluding loans or other debts and liabilities of the
Partnership to the General Partner or any Affiliate (such debts and
liabilities, in the case of a nonliquidating distribution, to be only those
which are then required to be paid or, in the judgment of the Managing
General Partner, required to be provided for);
(ii) to any additions to the Working Capital Reserve or other reserves as the
Managing General Partner deems reasonably necessary for contingent, unmatured
or unforeseen liabilities or obligations of the Partnership;
(iii) to the repayment of any unrepaid loans theretofore made by the General
Partner and/or any Affiliates to the Partnership for Partnership obligations
and to the payments of any unpaid amounts owing to the General Partner and/or
its Affiliates under this Agreement, including repayment of any Accounting
Fee Advances and payment of any unpaid Partnership Management Fees;
(iv) the balance, 95% to the Assignees and Limited Partners and 5% to the
General Partner; provided that the distribution to the General Partner
pursuant to this subparagraph (iv) shall be subordinated to a return of all
of the Assignees' and Limited Partners' Capital Contribution and to the
Priority Return.
(b) If there are insufficient funds to make payment in full of all amounts under
any subsection of Section 4.02(a), the funds then available for payment shall be
allocated proportionately among the Persons entitled to payment pursuant to such
subsection; provided, however, that within any subsection, funds shall be
distributed in the order of any priority specifically stated therein.
(c) Subject to the provisions of Section 3.04(c), distributions of Liquidation,
Sale or Refinancing Proceeds, if any, shall be made quarterly, within 45 days
after the end of each calendar quarter to which such proceeds relate.
4.03. ALLOCATION OF GAINS AND LOSSES.
(a) All gains (but not losses) arising from the sale, exchange or other
disposition of all or substantially all the property owned by an Operating
A-22
<Page>
Partnership or the Partnership's interest in an Operating Partnership shall be
allocated in the following manner:
(i) first, that portion of gains (including any profits treated as ordinary
income for federal income tax purposes) shall be allocated to the Partners or
Assignees who have negative Capital Account balances in an amount equal to
and in proportion to such balances; provided that no gain shall be allocated
to a Partner or Assignee under this Section 4.03(a)(i) once such Partner's or
Assignee's Capital Account is brought to zero;
(ii) second, gain in excess of the amount allocated under Section 4.03(a)(i)
shall be allocated to the Partners and Assignees in the amount and to the
extent necessary to increase their Capital Accounts so that the proceeds
distributed under Section 4.02(a)(iv) will be distributed in accordance with
the positive balance in the Partners' and Assignees' respective Capital
Accounts.
(b) All losses shall be allocated as follows:
(i) first, an amount of loss to the Partners and Assignees to the extent and
in such proportions as the respective balances in all Partners' and
Assignees' Capital Accounts;
(ii) second, any remaining loss to the Partners and Assignees in accordance
with the manner in which they bear the economic risk of loss or, if none, in
accordance with their Interests.
(c) Each Partner shall retain his respective Interest in the Partnership
attributable to property described in Section 751(a) of the Code ("interest in
Section 751 property") for so long as such Partner has an Interest in the
Partnership. Accordingly, any portion of the gains which are allocated pursuant
to Section 4.03(d) above, and which are treated as ordinary income for federal
income tax purposes under Section 1245 and 1250 of the Code, shall be allocated
to those Partners who have an interest in Section 751 property, in proportion to
the amounts of such Partners' respective interests in Section 751 property.
(d) Notwithstanding any other provision of this Agreement to the contrary that
may be expressed or implied herein, the Interests of the General Partners, in
the aggregate, in each item of Partnership income, gain, loss, deduction or
credit will be equal to at least 0.25% of each of those items at all times
during the existence of the Partnership.
4.04. DETERMINATION OF ALLOCATIONS AND DISTRIBUTIONS AMONG PARTNERS AND
ASSIGNEES.
(a) Except as provided in Sections 4.04(d) and 4.04(e), all Profits, Credits and
Losses allocable to the Limited Partners and Assignees and all Cash Available
for Distribution and all Liquidation, Sale or Refinancing Proceeds
A-23
<Page>
distributable to the Limited Partners and Assignees shall be allocated or
distributed, as the case may be, to each Limited Partner and Assignee entitled
to such allocation or distribution in the ratio which the BACs or Limited
Partnership Interests owned by such Limited Partner or Assignee bears to the
total BACs and Limited Partnership Interests owned by all Limited Partners and
Assignees entitled to such allocation or distribution; provided, however, that
any distribution pursuant to Section 4.02(a)(iv) shall be made to each Limited
Partner or Assignee entitled to such distribution in the ratio which the
positive balance in such Limited Partner's or Assignee's Capital Account bears
to the total positive balances in the Capital Accounts of all Limited Partners
and Assignees entitled to such distribution as of the date of the Liquidation,
Sale or Refinancing.
(b) Except as provided in Section 4.04(c), all Profits, Credits and Losses
allocable to the Limited Partners and Assignees, as a group, shall be allocated,
and all Cash Available for Distribution distributable to the Limited Partners
and Assignees, as a group, shall be distributed, as the case may be, to the
Persons recognized by the Partnership as the holders of record of BACs or
Limited Partnership Interests as of the last day of the calendar month for which
such allocation or distribution is to be made.
(c) All Profits, Credits and Losses for a Partnership year allocable to any BACs
or Limited Partnership Interests which has been transferred during such year
shall be allocated between the transferor and the transferee based upon the
number of monthly periods on the last day of which each was recognized (in
accordance with Section 7.02(b)) as the holder of record of the BACs or Limited
Partnership Interests for purposes of this Section, without regard to the
results of Partnership operations during particular monthly periods of such year
and without regard to whether cash distributions were made to either the
transferor or transferee.
(d) All Profits, Credits and Losses arising from an event giving rise to
Liquidation, Sale or Refinancing Proceeds allocable to the Limited Partners and
Assignees shall be allocated, and all Liquidation, Sale or Refinancing Proceeds
arising from such Liquidation, Sale or Refinancing distributable to the Limited
Partners and Assignees shall be distributed, as the case may be, to the Persons
who are holders of record of BACs or Limited Partnership Interests as of the
date of such Liquidation, Sale or Refinancing, or on a different record date as
may be established by the Managing General Partner within ten days thereof. All
Profits, Credits and Losses and all Liquidation, Sale or Refinancing Proceeds
which are attributable to a Liquidation, Sale or Refinancing but which are not
received by the Partnership as cash upon a Liquidation, Sale or Refinancing but
which will be received later by the Partnership as a result of an installment or
other deferred sale shall be allocated or distributed, as the case may be, to
the Persons recognized (in accordance with Sections 7.03(e) and 11.01(a) in the
case of a
A-24
<Page>
transfer of BACs or Limited Partnership Interests) as the holders of BACs or
Limited Partnership Interests as of the date such Liquidation, Sale or
Refinancing Proceeds are received by the Partnership or on a different record
date within ten days thereof as may be established by the Managing General
Partner.
(e) In the event that there is more than one Investment Date with respect to any
series, all Cash Available for Distribution, and all Profits, Credits and Losses
allocable to the Limited Partners and Assignees in such series as a class for
the period commencing with the first day following the previous Investment Date
and ending on the last day preceding the next succeeding Investment Date shall
be distributed or allocated solely to those Persons who held BACs or Limited
Partnership Interests as of or prior to the Investment Date occurring within
such period, on the basis of an interim closing of the Partnership's books on
such dates. In the event that the BACs are listed on a national exchange or
included for quotation on NASDAQ, the General Partner is authorized to allocate
Profits, Credits and Losses and to make distributions of cash or other property,
so as to equalize the BACs on an economic basis and to equalize any differences
in Capital Accounts attributable to multiple Investment Dates.
(f) Any portion of the gains treated as ordinary income for federal income tax
purposes under Section 1245 and 1250 of the Code ("Recapture Amount") shall be
allocated on a dollar for dollar basis to those Partners and Assignees to whom
the items of Partnership deduction or loss giving rise to the Recapture Amount
had been previously allocated.
(g) Subject to the requirements of Section 469 of the Code, if any, in the event
that there is a determination that any provision of the Code requiring
imputation of interest is applicable to the Capital Contributions of any Partner
or Assignee or any loan between a Partner or Assignee and the Partnership, any
income or deduction attributable to such Capital Contribution or loan (whether
stated or unstated) shall be allocated solely to such partner. The amount of any
imputed interest attributable to Capital Contribution of a Partner or Assignee
shall not be included in such Partner's or Assignee's Capital Account to the
extent previously included as capital.
(h) Notwithstanding any other provision in this Agreement, income, gain, loss
and deduction with respect to property which has a variation between its basis
computed in accordance with Treasury Regulation Section 1.704-1(b) and its basis
computed for Federal income tax purposes shall be shared among Partners so as to
take account of such variation in a manner consistent with the principles of
Section 704(c) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
A-25
<Page>
4.05. CAPITAL ACCOUNTS.
A separate Capital Account shall be maintained and adjusted for each Partner in
accordance with the Code and the Regulations. There shall be credited to each
Partner's Capital Account the amount of his capital contributed (including the
Capital Contributions of the Assignor Limited Partner on behalf of the
Assignees), the fair market value of any property contributed to the capital of
the Partnership (net of any liabilities secured by such property), such
Partner's distributive share of the Profits, Credits and Losses of the
Partnership, and such Partner's share of any tax-exempt income of the
Partnership; and there shall be charged against each Partner's Capital Account
the amount of all Cash Available for Distribution distributed to such Partner,
all Liquidation, Sale or Refinancing distributed to such Partner, the fair
market value of any property distributed to such Partner (net of any liabilities
secured by such property), such Partner's distributive share of the Losses of
the Partnership, and allocations to such Partner of expenditures of the
Partnership described in Section 705(a)(2)(B) of the Code. Each Partner's
Capital Account shall be maintained and adjusted in accordance with the Code and
Treasury Regulations thereunder, including expressly, but not by way of
limitation, the adjustments to Capital Accounts under Section 704(b) of the Code
and the Treasury Regulations thereunder. The foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Treas. Reg. (S)1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. It is the intent of the
Partners that the Capital Accounts maintained under this Agreement be determined
and maintained throughout the full term of this Agreement in accordance with the
accounting rules of Treas. Reg. (S)1.704-(b)(2)(iv). The Assignor Limited
Partner's Capital Account shall be subdivided into separate Capital Accounts for
each Assignee and shall be maintained and adjusted for each Assignee in
accordance with the foregoing.
4.06. AUTHORITY OF GENERAL PARTNERS TO VARY ALLOCATIONS TO PRESERVE AND PROTECT
PARTNERS' INTENT.
It is the intent of the Partners that each Partner's or Assignee's distributive
share of income, gain, loss, deduction, or credit (or item thereof) shall be
determined and allocated in accordance with this Article IV to the fullest
extent permitted by Section 704(b) of the Code. The General Partner is
authorized and directed to allocate income, gain, loss, deduction, or credit (or
item thereof) arising in any year differently than otherwise provided for in
this Article IV to the extent that, allocating income, gain, loss, deduction, or
credit (or item thereof) in the manner provided for in this Article IV in the
opinion of tax advisors to the Partnership would cause the determinations and
allocations of each Partner's or Assignee's distributive share of income, gain,
loss, deduction, or credit (or item thereof) not
A-26
<Page>
to be permitted by Section 704(b) of the Code and Treasury Regulations
promulgated thereunder. Any allocation made pursuant to this Section 4.06 shall
be deemed to be a complete substitute for any allocation otherwise provided for
in this Article IV in the opinion of tax advisors to the Partnership and no
amendment of this Agreement or approval of any Partner or Assignee shall be
required.
4.07. ALLOCATIONS BETWEEN AND AMONG SERIES.
To the extent that BACs are issued in series, allocations and distributions of
each item set forth in this Article IV shall be made and accounted for
separately for each series of BACs.
4.08. SPECIAL ALLOCATIONS.
(a) Notwithstanding any other provision of this Agreement, if there is a net
decrease in Partnership Minimum Gain during a Partnership taxable year, each
Partner or Assignee shall be specially allocated, before any other allocation is
made under this Agreement, items of income and gain for such year (and, if
necessary, for subsequent taxable years) in amounts equal to the greater of (i)
the amounts needed to eliminate any deficit Capital Account balance (reduced by
the portion of such deficit balances (A) that must be restored upon liquidation,
if any, and (B) that would be eliminated under Treas. Reg. (S)1.704-2(b) if the
Partnership were liquidated at such time, and increased by the items described
in Treas. Reg. (S)1.704-1(b)(2)(ii)(d)(4), (5) and (6)), or (ii) the portion of
each such Partner's share of the net decrease in Partnership Minimum Gain during
such year (as specified in Treas. Reg. 1.704-2(b) and (d)) that is allocable to
the disposition of Partnership property subject to one or more nonrecourse
liabilities of the Partnership. The items so allocated shall be determined in
accordance with Treas. Reg. (S)1.704-2(b), (g) and (j). This provision is
intended to comply with the minimum gain charge BAC requirement of the Treasury
Regulations under Section 704(b) of the Code and shall be interpreted
consistently therewith.
(b) Except as provided in Section 4.08(a) hereof, in the event any Partner or
Assignee unexpectedly receives any adjustments, allocations or distributions
described in Treas. Reg. (S)1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Partnership income and gain shall be specially allocated to each such Partner in
an amount and manner sufficient to eliminate (to the extent required by the
Regulations under Code Section 704(b)) the deficit balance in each such
Partner's or Assignee's Capital Account as quickly as possible, provided that an
allocation pursuant to this Section 4.08(b) shall be made only if and to the
extent that such Partner or Assignee has a deficit Capital Account balance in
excess of such sum after all other allocations provided for in this Section 4
have been tentatively made, as if this Section 4.08(b) were not in this
Agreement.
A-27
<Page>
(c) In the event that a Partner or Assignee has a deficit Capital Account
balance at the end of any Partnership year that exceeds the sum of (i) the
amount that such Partner or Assignee must repay to the Partnership upon
liquidation, if any, and (ii) the amount that such Partner or Assignee is deemed
to be obligated to restore under Treas. Reg. (S)1.704-2(g), such Partner or
Assignee shall be allocated items of Partnership income in the amount of such
excess as soon as possible, provided that an allocation pursuant to this Section
4.08(c) shall be made only if and to the extent that such Partner or Assignee
has a deficit Capital Account balance in excess of such sum after all other
allocations provided for in this Section 4 have been tentatively made, as if
this Section 4.08(c) were not in this Agreement.
(d) The allocations set forth in this Section 4.08 (the "Regulatory
Allocations") are intended to comply with certain requirements of Treas. Reg.
(S)1.704-1(b) and Treas. Reg. (S)1.704-2. Notwithstanding any other provisions
of this Article IV (other than the Regulatory Allocations), the Regulatory
Allocations shall be taken into account in allocating other profits, losses and
items of income, gain, loss and deduction among the Partners or Assignees so
that, to the extent possible, the net amount of such allocations of other
profits, losses and other items and the Regulatory Allocations to each Partner
or Assignee shall be equal to the net amount that would have been allocated to
each such Partner if the Regulatory Allocations had not occurred.
(e) If there is a net decrease in Partner Non-Recourse Debt Minimum Gain during
a Partnership taxable year, then each Partner with a share of the minimum gain
attributable to such debt at the beginning of such year will be allocated items
of income and gain for such year (and, if necessary, subsequent years) in
proportion to, and to the extent of, an amount equal to such Partner's share of
the net decrease in Partner Non-Recourse Debt Minimum Gain during the year. A
Partner is not subject to this Partner Non-Recourse Debt Minimum Gain charge BAC
to the extent that any of the exceptions provided in Treas. Reg.
(S)1.704-2(i)(4) applied consistently with Treas. Reg. (S)1.704-2(f)(2)-(5)
apply. Such allocations shall be made in a manner consistent with the
requirements of Treas Reg. (S)1.704-2(i)(4) under Section 704 of the Code.
ARTICLE V
RIGHTS, OBLIGATIONS AND POWERS OF THE
GENERAL PARTNER
5.01. MANAGEMENT OF THE PARTNERSHIP.
(a) The General Partner, within the authority granted to it under this
Agreement, shall have full, complete and exclusive discretion to manage and
control the business of the Partnership to the best of its ability and to
A-28
<Page>
use its best efforts to carry out the purpose of the Partnership. In so doing,
the General Partner shall take all actions necessary or appropriate to protect
the interests of the Limited Partners and the Assignees. The General Partner
shall devote such time as is necessary to the affairs of the Partnership. The
General Partner shall not receive compensation therefor from the Partnership
other than as expressly provided herein. The General Partner shall have
fiduciary responsibility for the safekeeping and use of all funds and assets of
the Partnership, whether or not in the General Partner's possession or control,
and it shall not employ such funds or assets in any manner except for the
exclusive benefit of the Partnership.
(b) Subject to the other provisions of this Agreement, Boston Capital Associates
V L.L.C. shall be the Managing General Partner. All decisions made for and on
behalf of the Partnership by the Managing General Partner shall be binding upon
the Partnership. Except as expressly otherwise set forth elsewhere in this
Agreement, the Managing General Partner (acting for and on behalf of the
Partnership), in extension and not in limitation of the rights and powers given
by this or by the other provisions of this Agreement shall, in its sole
discretion, have full and entire right, power and authority in the management of
the Partnership business to do any and all things necessary to effectuate the
purpose of the Partnership. Without limiting the foregoing grant of authority
but subject to the other provisions of this Agreement, the Managing General
Partner, in its capacity as General Partner shall have the right, power and
authority, acting for and on behalf of the Partnership, to do all acts and
things set forth in Section 5.02. No Person dealing with the Managing General
Partner shall be required to determine its authority to make any undertaking on
behalf of the Partnership or to determine any facts or circumstances bearing up
on the existence of such authority.
(c) The Managing General Partner shall, after the release from escrow of orders
for BACs pursuant to Section 3.03, establish the Working Capital Reserve out of
Capital Contributions in an amount of not less than 4% of the Gross Proceeds.
The Working Capital Reserve may be increased or reduced by the Managing General
Partner as it deems appropriate under the circumstances from time to time.
(d) All of the Partnership's Operating Expenses shall be billed to and paid by
the Partnership. In the event that legitimate Partnership expenses are billed by
its creditors to the Managing General Partner rather than the Partnership,
subject only to the limitations herein which apply generally to the
Partnership's expenses, such expenses shall be paid by the Partnership. The
Operating Expenses to be paid by the Partnership in connection with the
Partnership's business include without limitation: (i) all costs of personnel
employed by the Partnership and involved in the business of the Partnership,
except as prohibited pursuant to Section 5.01(e) below,
A-29
<Page>
(ii) all costs of borrowed money, taxes and assessments applicable to the
Partnership (including interest or other changes on loans or letters of credit
by or obtained by the General Partners or their Affiliates), (iii) legal, audit,
accounting and appraisal fees, (iv) printing, engraving and other expenses and
taxes incurred in connection with the issuance, distribution, transfer,
registration and recording of documents evidencing ownership of an Interest in
the Partnership or in connection with the business of the Partnership, (v) fees
and expenses paid to independent contractors, mortgage bankers, finders, brokers
and servicers, consultants, real estate brokers, and other agents, (vi) expenses
in connection with the acquisition, sale, exchange or other disposition and
financing of the Operating Partnership Interests, (vii) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership and
(viii) costs incurred in connection with any litigation or regulatory proceeding
in which the Partnership is involved except as may be prohibited by Section
5.08.
(e) Reimbursements to the General Partner or any of its Affiliates shall not be
allowed, except for reimbursement of (i) Organizational and Offering Expenses,
(ii) the actual cost to the General Partners or such Affiliates of goods and
materials supplied by unaffiliated parties used for or by the Partnership, or in
the case of any goods and materials purchased from the General Partner or its
Affiliates, 90% of the competitive price of such goods and materials and (iii)
the direct expenses, including, but not limited to, travel and telephone, of
them or their employees on Partnership business, and direct out-of-pocket
expenses incurred in rendering legal, accounting, bookkeeping, computer,
printing, public relations and any other administrative services necessary to
the prudent operation of this Partnership, which services could be performed by
independent parties. Reimbursement of expenses shall not exceed the lesser of
the cost of such expenses or the amount which an independent party would charge
for such services. Notwithstanding the foregoing, the General Partner and its
Affiliates (including the Assignor Limited Partner) may be reimbursed for the
administrative services necessary to the prudent operation of the Partnership,
provided that any such reimbursement shall be at the lower of the General
Partner's actual cost or the amount the Partnership would be required to pay to
independent parties for comparable administrative services in the same
geographic location. No reimbursement shall be permitted for services for which
the General Partner is entitled to compensation by way of a separate fee. The
General Partner or its Affiliates may not be reimbursed for general overhead
expenses in connection with the ongoing administration of the Partnership during
its operational phase, such as rent, depreciation, utilities, capital equipment
and other administrative expenses, or the salaries, fringe benefits, travel
expenses and other administrative items incurred by or allocated to any of their
Controlling Persons.
A-30
<Page>
The amount of Organization and Offering Expenses are estimated to be 5.5% of the
Gross Proceeds applicable to the first 250,000 BACs issued, and may be
proportionally more if fewer than 250,000 BACs are issued and proportionally
less with respect to the issuance of additional BACs. Subsequent series (if
applicable) may therefore be required to reimburse the first series for that pro
rata share of such items.
Notwithstanding the terms and conditions of Sections 5.01(d) and (e) above, if
Front End Fees exceed the percentage of Gross Proceeds (after investment in
Invested Properties and deposit into the Working Capital Reserve) allowable
therefor pursuant to Section IV.C.2. of the NASAA Guidelines, the excess will be
paid by the General Partner and not the Partnership.
The annual report of the Partnership will include a breakdown of the amounts
actually reimbursed to the General Partner and its Affiliates. The Accountants
for the Partnership will certify that the amounts actually reimbursed were costs
incurred in the management of the Partnership. The methods of verification used
by the Accountants will be in accordance with generally accepted auditing
standards and other auditing procedures which the Accountants consider
appropriate, including but not limited to, review of the time records of the
employees of the General Partner and its Affiliates, and review of the nature of
the tasks performed by such employees for which the General Partner is
reimbursed.
The method of verification shall at minimum provide: (a) a review of the time
records of individual employees, the cost of whose services were reimbursed and
(b) a review of the specific nature of the work performed by each such employee.
The additional costs of such verification will be itemized by said Accountants
on a program-by-program basis and may be reimbursed to the General Partner by
the Partnership in accordance with this provision only to the extent that such
reimbursement, when added to the cost for administrative services rendered, does
not exceed the competitive rate for such services as determined above.
5.02. AUTHORITY OF THE MANAGING GENERAL PARTNER.
(a) Subject to Sections 5.03 and 5.04, the Managing General Partner for, and in
the name and on behalf of, the Partnership is hereby authorized, without
limitation:
(i) to negotiate for and enter into agreements to acquire, hold, encumber,
sell, dispose of and otherwise manage the Operating Partnership Interests, at
such price and upon such terms, as it deems to be in the best interests of
the Partnership, the Limited Partners and Assignees;
(ii) to give the consent of the Partnership in its capacity as a limited
partner of an Operating Partnership to any action proposed to be taken by
such Operating Partnership which, under the provisions of its Operating
A-31
<Page>
Partnership Agreement, requires the consent of the Investment Partnership,
including the sale or refinancing of any Apartment Complex;
(iii) to waive any condition precedent to the making of an installment of
capital contributions to an Operating Partnership or to waive any material
default by an Operating General Partner in the performance of his obligations
under any Operating Partnership Agreement;
(iv) to designate, on the behalf of the Investment Partnership, a successor
Operating General Partner, to the extent so provided in any Operating
Partnership Agreement;
(v) to require the applicable Operating General Partner(s) to repurchase an
Operating Partnership Interest upon the occurrence of a repurchase event
under the applicable Operating Partnership Agreement;
(vi) to execute any applicable documents which the General Partner deems
necessary or appropriate in connection with the development and financing of
any Apartment Complex in which the Partnership acquires an interest;
(vii) to acquire by purchase, lease, exchange or otherwise, any real or
personal property;
(viii) to borrow money and issue evidences of indebtedness, and to secure the
same by mortgage, deed of trust, pledge or other lien on any Operating
Partnership Interest or other assets of the Partnership;
(ix) to employ agents, employees, managers, accountants, attorneys,
consultants and other Persons necessary or appropriate to carry out the
business and operations of the Partnership, and to pay fees, expenses,
salaries, wages and other compensation to such Persons;
(x) to pay, extend, renew, modify, adjust, submit to arbitration, prosecute,
defend or compromise, upon such terms as it may determine and upon such
evidence as it may deem sufficient, any obligation, suit, liability, cause of
action or claim, including taxes, either in favor of or against the
Partnership;
(xi) to determine the appropriate accounting method or methods to be used by
the Partnership (the Partnership intends to utilize the accrual method of
accounting);
(xii) to cause the Partnership to make or revoke any of the elections
referred to in Sections 195, 709, 732, 754, or 1017 of the Code or any
similar provisions enacted in lieu thereof or any other elections beneficial
to the Assignees and the Partners of the Partnership;
(xiii) to allocate income, gain, loss, deduction, or credit (or item thereof)
in accordance with Article IV of this Agreement;
A-32
<Page>
(xiv) to establish and maintain the Working Capital Reserve, originally in
the amount of not less than 4% of Gross Proceeds, and thereafter in such
amounts as it deems appropriate from time to time;
(xv) to amend this Agreement to reflect the substitution of Limited Partners,
and to amend this Agreement as provided for in Section 12.02;
(xvi) to invest all funds not immediately needed in the operation of the
business, including, but not limited to (A) the Net Proceeds prior to
investment in and allocation to specific Operating Partnerships, (B) the Net
Proceeds allocated for subsequent investment in a particular Operating
Partnership or (C) the Working Capital Reserve, in Permitted Temporary
Investments;
(xvii) to deal with, or otherwise engage in business with, or provide
services to and receive compensation therefor from any Person who has
provided any services to, lent money to, sold property to, or purchased
property from the General Partner or any of its Affiliates or who may in the
future provide services to, lend money to, sell to or purchase property from
such parties;
(xviii) to obtain loans for the Partnership from the General Partner or any
Affiliate of the General Partner in accordance with the requirements of
Section 5.03;
(xix) to prepare and file with the Securities and Exchange Commission a
registration statement with respect to the Offering and take all actions
necessary or desirable to cause such registration statement to be declared
effective by the Securities and Exchange Commission; to prepare and
distribute, or cause to be distributed, the Prospectus; and to take any and
all other actions to effectuate the Offering;
(xx) to cooperate with the Assignor Limited Partner to facilitate the
issuance of one or more series of BACs;
(xxi) to take such actions as are necessary and appropriate to permit or
restrict the transfer of BACs, including the listing of the BACs on, and/or
the delisting of the BACs from (pursuant to Section 11.04), public trading
markets or include the BACs for quotation on the National Association of
Securities Dealers Automated Quotation System; provided that the General
Partner may not take such actions to list the BACs for quotation or trading
until counsel to the Partnership has rendered its opinion that it is
substantially more likely than not that listing the BACs will not cause the
Partnership to be treated as a corporation for federal income tax purposes;
(xxii) to deal with, delegate, enter into an agreement, agreements, or
contracts with a financial institution or other entity to conduct, on its
behalf, transfers of BACs, including correspondence with the Assignees,
preparing, transmitting and doing all other necessary actions to effect
A-33
<Page>
transfers, assignments or other dispositions of BACs as requested by
Assignees and to do all other acts authorized hereunder in connection with
such administrative activities relating to the Assignees; provided however,
that except as set forth in Sections 7.03(c) and 7.05(c), the cost of such
services shall be borne by the Partnership for ordinary and necessary
business expenses with respect to the provision of services to the Partners
and Assignees. Further, any contractual arrangement between the Partnership
and the transfer agent with respect to the BACs shall not relieve the
Managing General Partner of its fiduciary duties hereunder;
(xxiii) to engage in any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to
the accomplishment of the purposes of the Partnership.
(b) With respect to all of its obligations, powers and responsibilities under
this Agreement, the Managing General Partner is authorized to execute and
deliver, for and on behalf of the Partnership, such notes and other evidences of
indebtedness, contracts, agreements, assignments, deeds, leases, loan
agreements, mortgages and other security instruments and agreements as it deems
proper, all on such terms and conditions as it deems proper.
(c) All series of BACs will (i) have substantially identical investment
objectives in generating Tax Credits, and possibly State Housing Tax Credits,
(ii) provide for no duplication of property management or other fees, (iii)
provide for substantially identical compensation to the General Partner and its
Affiliates and (iv) provide for investment in Operating Partnership Interests
under substantially the same terms and conditions. Additionally, Operating
Partnership Interests may be invested in jointly by series of BACs only in
accordance with the conditions set forth in Section 5.05(c).
5.03. AUTHORITY OF GENERAL PARTNER AND ITS AFFILIATES TO DEAL WITH PARTNERSHIP
AND OPERATING PARTNERSHIPS.
(a) The General Partner and its Affiliates may not be an Operating General
Partner, unless there has been a material and adverse breach of the Operating
Partnership Agreement by the unaffiliated Operating General Partner. In such
instance, the affiliated Operating General Partner shall fully comply with all
provisions of Section V.H.6 of the NASAA Guidelines. An Affiliate of the General
Partner may, and shall have the right to, act as management agent of any
Apartment Complex on terms and conditions permitted by any applicable
governmental regulations or any applicable requirements of any lender and as set
forth in Section 5.03(b).
(b) (i) Except in extraordinary circumstances, the General Partner or any
Affiliate shall not have the right to contract or otherwise deal with any
Operating Partnership for the sale of goods or services or the lending of
A-34
<Page>
money to an Operating Partnership or the Operating General Partners, except for:
(i) Apartment Complex management services, the fee for which shall be as set
forth in Section 5.03(b)(ii) hereof, (ii) loans made by, or guaranteed
by, the General Partner or its Affiliates and (iii) for those dealings,
contracts or provision of services described in this Agreement.
Extraordinary circumstances shall only be presumed to exist where there
is an emergency situation requiring immediate action and the services
required are not immediately available from unaffiliated parties. All
services rendered shall be rendered pursuant to a written contract which
shall contain a clause allowing termination without penalty on sixty
(60) days Notice. Goods and services will be provided at the lesser of
actual cost or the price charged for such goods or services by
independent parties. Any payment made to the General Partner or any
Affiliate for such goods, services or loans shall be fully disclosed to
all Assignees and Limited Partners in the reports required hereunder.
Neither the General Partner nor any Affiliate shall, by the making of
lump sum payments to any other Person for disbursement by such other
Person, circumvent the provisions of this Section 5.03(b).
(ii) Property management, rent-up or leasing fees shall be paid to the
General Partner or any of its Affiliates only for services actually
rendered and shall be in an amount equal to the lesser of (i) fees
competitive in price and terms with those of non-Affiliated Persons
rendering comparable services in the locality where the Apartment
Complex is located and which could reasonably be available to the
Partnership or (ii) 5% of such Apartment Complex's gross revenues. No
duplicate property management fees or other fees shall be paid to any
Person.
(c) In the event extraordinary circumstances arise, the General Partner and its
Affiliates may provide construction services. The General Partner or its
Affiliates shall not provide such services to the Partnership unless it believes
that it has an adequate staff to do so and unless such provision of goods and
construction services is part of its ordinary and ongoing business in which it
has previously engaged, independent of the activities of the Partnership. Such
services being provided shall be reasonable for and necessary to the
Partnership, shall be actually furnished to the Partnership and, shall be
provided at the lower of 100% of the construction contract rate with respect to
the applicable Apartment Complex or 90% of the competitive price charged for
such services by independent parties for comparable goods and services in the
same geographic location (except that in the case of transfer agent, custodial
and similar banking-type fees, and insurance fees, the compensation, price or
fee shall be at the lesser of
A-35
<Page>
cost or the compensation, price or fee of any other Person rendering comparable
services as aforesaid). Cost of services as used herein means the pro rata cost
of personnel, including an allocation of overhead directly attributable to such
personnel, based on the amount of time such personnel spent on such services, or
other method of allocation acceptable to the Partnership's Accountants. The
costs of verification of costs reimbursed to the General Partner or its
Affiliates contained in the annual report may be reimbursed only to the extent,
when added to the costs of such goods or services rendered, that the sum does
not exceed the competitive rate for such services.
(d) All services provided by the General Partner or any Affiliates pursuant to
Section 5.03(c) shall be rendered pursuant to this Agreement or a written
contract, which contract precisely describes the services to be rendered and all
compensation to be paid and shall contain a clause allowing termination without
penalty on 60 days Notice to the General Partner by the vote of the majority in
Interest of the Limited Partners and the BAC Holders (the Assignor Limited
Partner acting according to the direction of the BAC Holders). The General
Partner and its Affiliates shall not have the right to contract or otherwise
deal with the Partnership for the sale of goods or services, except for those
dealings, contracts or provision of services on terms described in this
Agreement.
(e) The following prohibitions shall apply with respect to the General Partner
and its Affiliates: (i) neither the General Partner nor any such Affiliate shall
be given an exclusive right to sell, or exclusive employment to sell, any
Apartment Complex, (ii) the Partnership shall not lend money to the General
Partner or any Affiliate of the General Partner, (iii) neither the General
Partner nor any Affiliate of the General Partner shall make any loan to the
Partnership if such loan provides for a prepayment penalty or the interest rates
and other finance charges and fees in connection with such loan are in excess of
the rate or fees at which the Partnership could have borrowed from an
independent bank under comparable circumstances or, if lower, the rate which the
General Partner or such Affiliate paid to obtain the funds to make the loan to
the Partnership compounded monthly and (iv) no compensation or fees may be paid
by the Partnership or an Operating Partnership to the General Partner or its
Affiliates except as described in this Agreement or in the Prospectus, and in no
event shall the aggregate compensation payable to the Partnership, the General
Partner or its Affiliates exceed the amounts permitted under Section IV of the
NASAA Guidelines.
A-36
<Page>
(f) Notwithstanding any provisions of this Section 5.03, neither the General
Partner nor any of its Affiliates shall:
(i) receive any rebate or give-up, or participate in any reciprocal
arrangement, of which would circumvent the provisions of the Partnership
Agreement;
(ii) receive any compensation for providing insurance brokerage services to
the Partnership, unless such services and compensation are provided in
compliance with Section 5.03(b), and (x) the cost of providing such services
is no greater than the lowest quotes obtained from two unaffiliated insurance
agencies and the coverage and terms are comparable, and (y) at least 75% of
the insurance brokerage service gross revenues of the General Partner or its
Affiliates are derived from other than insurance brokerage services provided
to Affiliates;
(iii) provide "financing" to the Partnership, as that term is defined in
Section I.B.17. of the NASAA Guidelines as the indebtedness encumbering
program properties, the principal amount of which is scheduled to be paid
over a period of not less than 48 months, and not greater than 50 percent of
the principal amount of which is scheduled to be paid during the first 24
months. Nothing in this definition shall be construed as prohibiting a
bonafide prepayment provision in the financing agreement;
(iv) charge the Partnership for, or take from any other Person, any property
management fee with respect to Partnership property or assets, except as
provided in Section 5.03(b);
(v) pay or award, directly or indirectly, any commission or other
compensation (other than normal sales commissions and reimbursement of
expenses payable to registered broker-dealers which may include cash
incentives under a program submitted for review and approval by the National
Association of Securities Dealers, Inc. ("NASD") in accordance with Section
5(f) of Appendix F to Section 34 of the NASD Rules of Fair Practice) to any
Person engaged by a potential investor for investment advice as an inducement
to such advisor to advise such investor to purchase BACs.
(g) Notwithstanding any provision in this Agreement, in no event shall the
General Partner or its Affiliates provide services or receive compensation other
than as allowed by Sections V.E.2 and V.J. of the NASAA Guidelines.
A-37
<Page>
5.04. GENERAL RESTRICTIONS ON AUTHORITY OF GENERAL PARTNER.
In exercising management and control of the Partnership, the General Partner, on
behalf of the Partnership and in furtherance of the business of the Partnership,
shall have the authority to perform all acts which the Partnership is authorized
to perform. However, the General Partner shall not have any authority to:
(a) perform any act in violation of this Agreement or any applicable law or
regulation thereunder;
(b) do any act required to be approved or ratified in writing by all Limited
Partners (including the Assignor Limited Partner voting as instructed by the
Assignees) under the Act, unless the right to do so is expressly otherwise
given in this Agreement;
(c) without the Consent of a majority in Interest of the Limited Partners
(including the Assignor Limited Partner voting as instructed by the
Assignees), sell or otherwise dispose of all or substantially all of the
assets of the Partnership in a single sale or disposition or in a series of
contemporaneous sales or dispositions with a view towards distribution;
(d) borrow from the Partnership;
(e) elect to dissolve the Partnership without the Consent of a majority in
Interest of the Limited Partners (including the Assignor Limited Partner
voting as instructed by the Assignees) (unless a greater number of Limited
Partners is then required under the Act);
(f) do any act which would make it impossible to carry on the ordinary
business of the Partnership;
(g) confess a judgment against the Partnership;
(h) possess Partnership property, or assign its rights in specific
Partnership property, for other than a Partnership purpose;
(i) admit a Person as a General Partner, except as provided in this
Agreement;
(j) knowingly perform any act that would subject any Assignee to liability as
a general partner in any jurisdiction;
(k) invest Partnership funds in junior trust deeds, land sale contracts or
similar obligations;
(l) invest in or underwrite the securities of other issuers, except as
provided in Sections 5.02(a)(xvi) or 9.03; provided, however, that the
General Partner may temporarily invest Partnership funds in money market
funds or other suitable investments (other than funds organized as limited
partnerships);
A-38
<Page>
(m) invest Partnership funds in investments organized and/or operated by its
Affiliates other than as set forth in Sections 5.03(a) and 5.05(c) hereof;
(n) allocate any income, gain, loss, deduction, or credit (or any item
thereof) to any Partner or Assignee if, and only to the extent that, such
allocation will cause the determinations and allocations of income, gain,
loss, deduction, or credit (or any item thereof) provided for in Article IV
hereof not to be permitted by Section 704(b) and the Treasury Regulations
promulgated thereunder;
(o) issue senior securities or offer BACs or Partnership Interests in
exchange for property other than cash;
(p) utilize Net Proceeds for any purpose other than as set forth in this
Agreement and in the Prospectus;
(q) utilize for Investment in Properties less than the greater of (i) 82.5%
of the Gross Proceeds reduced by 0.1625% for each 1% of financing encumbering
the Apartment Complex; or (ii) 69.5% of the Gross Proceeds. To calculate the
percentage of financing encumbering the Apartment Complex, divide the amount
of financing by the Purchase Price, excluding Front End Fees and multiply the
quotient by .1625% to determine the percentage deducted from 82.5%;
(r) make loans to the Partnership or accept loans on behalf of the
Partnership from any Affiliate of the General Partners that do not comply
with Section 5.03(e)(iii);
(s) utilize any Liquidation, Sale or Refinancing Proceeds to acquire
additional Operating Partnership Interests, except that with respect to each
series of BACs, any return of Capital Contributions received by the
Partnership from any Operating Partnership during the first 24 months after
acquisition of such Operating Partnership Interests and any Liquidation, Sale
or Refinancing Proceeds otherwise received within 36 months from the
Partnership's acquisition of Operating Partnership Interests may, in the
discretion of the General Partner, be invested in additional Operating
Partnership Interests, placed in the Working Capital Reserve, or refunded to
Investors in such series, provided that in no event shall the General Partner
make any reinvestments in Operating Partnership Interests with respect to a
particular series of BACs later than 36 months from the final Investment Date
with respect to such series; provided, further, that (i) a sufficient portion
of such funds shall be distributed to BAC Holders to cover their estimated
income tax liabilities, if any, arising out of the receipt of such funds, and
(ii) any compensation to the General Partner and/or its Affiliates in the
event of a reinvestment is subject to the limitations set forth in Sections
5.03, 5.04(q), 5.15 and 5.16 of this Agreement;
A-39
<Page>
(t) invest in limited partnership interests of programs other than programs
which own and operate a property to be qualified pursuant to Section 42(g) of
the Code;
(u) invest in Operating Partnership Interests jointly with other programs,
except in accordance with the conditions set forth in Section 5.05(c);
(v) sell, lease or lend Partnership assets to the General Partner or any
Affiliate of the General Partner or purchase or lease property from the
General Partner or its Affiliates, or acquire property from a program in
which the General Partner or its Affiliates have an interest, or sell or
lease an Apartment Complex to an Operating Partnership;
(w) reinvest Net Cash Flow (excluding Liquidation, Sell or Refinancing
Proceeds) in Operating Partnership Interests;
(x) incur Partnership indebtedness exceeding 85% of the value of the
Partnership's assets;
(y) take any action to merge or Roll-Up the Partnership with or into any
other entity.
5.05. MANAGEMENT OBLIGATIONS.
In conducting the business of the Partnership, the General Partners shall be
bound by the following:
(a) The Partnership's interest in any Operating Partnership shall not be
acquired with a view to resale and shall be acquired for long-term
appreciation.
(b) The Partnership shall normally seek to minimize depreciation recapture
and to defer capital gain taxes by not selling any interest in any Operating
Partnership, or by not causing, or consenting to, the sale of any Apartment
Complex unless proceeds arising from such sale are likely to be sufficient to
meet the federal tax liabilities at the then maximum rate of the Assignees or
the Limited Partners arising from such sale.
(c) Operating Partnership Interests may be invested in jointly by series of
BACs, or may be invested in jointly by a series of BACs with another publicly
registered program (either of such parties referred to as a "Program"),
provided that any joint investment in Operating Partnership Interests will
satisfy the following conditions:
(i) the two Programs have substantially identical investment objectives;
(ii) there are no duplicate property management or other fees;
(iii) the compensation to the sponsor of each Program is substantially
identical in each Program;
A-40
<Page>
(iv) each Program will have a right of first refusal if the other Program
wishes to sell its Operating Partnership Interest;
(v) the investment of each Program is on substantially the same terms and
conditions.
In addition, subject to the requirements set forth herein, the General
Partner may reallocate a portion of its 0.25% interest in Tax Credits and
losses in a particular series to investors in another series for the same
consideration paid by the series.
(d) Operating Partnership Interests may also be invested in jointly with an
affiliated Program which is not publicly registered if in addition to the
requirements set forth in Section 5.05(c), such investment is necessary to
relieve the Sponsor from any commitment to purchase an Operating Partnership
Interest in compliance with this Agreement prior to the closing of the
Offering.
(e) The completion of any Apartment Complex which is under construction at
the time of the acquisition of an Operating Partnership Interest by the
Partnership shall be secured by a completion bond in the amount of the
contract price or other satisfactory security, which may include, but is not
limited to, the following:
(i) A written guarantee of completion by a Person, supported by financial
statements demonstrating sufficient net worth or adequately collateralized
by other real or personal properties or other Persons' guarantees;
(ii) A retention of a reasonable portion of the capital contributions to
the Operating Partnership and/or fees to the Operating General Partner(s)
as a potential offset in the event the Operating General Partner does not
perform in accordance with the Operating Partnership Agreement.
(f) All acquisitions by the Partnership of Operating Partnership Interests in
Operating Partnerships owning Apartment Complexes must be supported by either
(i) an appraisal prepared by a competent, independent appraiser or (ii) FmHA
Forms 1924-13 (estimate and BAC of actual cost) and 1930-7 (statement of
budget, income and expense) or HUD project cost and budget analysis on Form
2264, or any successor or FmHA or HUD form, any comparable form of a state or
other governmental agency, including any applicable Tax Credit allocation
agency, setting forth estimates with respect to construction and mortgage
financing costs and initial rental income and operating expenses figures. The
appraisal or governmental form(s) shall be maintained in the Partnership's
records for at least five years, and shall be available for inspection and
duplication by any Partner or Assignee. Such appraisal or governmental
form(s) shall demonstrate that the total amount of indebtedness
A-41
<Page>
incurred by the Operating Partnerships shall not exceed the sum of 85% of the
Aggregate Cost of all Apartment Complexes which have not been refinanced, and
85% of the aggregate fair market value of all refinanced Apartment Complexes,
as determined by the lender as of the date of refinancing. Notwithstanding
the foregoing, however, to the extent any Apartment Complexes are financed by
(i) loans insured or guaranteed by the full faith and credit of the United
States government, or of a state or local government, or by an agency or
instrumentality of any of the foregoing, and/or (ii) loans received by any of
the foregoing, following termination of the Offering, the total amount of
indebtedness incurred by the Operating Partnerships with respect to such
Apartment Complexes shall not exceed the sum of 100% of the Aggregate Cost of
all such Apartment Complexes which have not been refinanced, and 100% of the
aggregate fair market value of all such refinanced Apartment Complexes, as
determined by the lender as of the date of refinancing.
5.06. DELEGATION OF AUTHORITY.
Subject to the provisions of this Article V, the General Partner may delegate
all or any of its powers, rights and obligations hereunder, and may appoint,
employ, contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General Partner
may approve.
5.07. OTHER ACTIVITIES.
The General Partner and any Affiliate may engage in or possess interests in
other business ventures of every kind and description for its own account,
including, without limitation, serving as general partner of other partnerships
which own, either directly or through interests in other partnerships, apartment
complexes similar to the Apartment Complexes. Neither the Partnership nor any of
the Partners shall have any rights by virtue of this Agreement in or to such
other business ventures or to the income or profits derived therefrom.
5.08. LIMITATION ON LIABILITY OF GENERAL PARTNER AND ASSIGNOR LIMITED PARTNER;
INDEMNIFICATION.
(a) Neither the General Partner, its Affiliates nor the Assignor Limited Partner
shall be liable, responsible or accountable in damages or otherwise to the
Partnership or to any of the Limited Partners or BAC Holders for any act or
omission performed or omitted by such General Partner or Assignor Limited
Partner if the General Partner determines in good faith, that the act or
omission was in the best interests of the Partnership, provided that such
General Partner's or Assignor Limited Partner's conduct did not constitute
Cause. Notwithstanding the foregoing, the General Partner shall be
A-42
<Page>
liable to the Partnership, Limited Partners, or BAC Holders for violations of
federal securities laws for which lack of Cause is not a defense. The
Partnership shall indemnity and hold harmless the General Partner and its
Affiliates, including, the Assignor Limited Partner against and for any loss,
liability or damage incurred by any of them or the Partnership by reason of any
act performed or omitted to be performed by them in good faith, in connection
with the business of the Partnership including all judgments, costs and
attorneys' fees (which costs and attorneys' fees may not be paid as incurred,
except as provided in Section 5.08 (c)) and any amounts expended in settlement
of any claims of liability, loss or damage, provided that the indemnified
Person's conduct did not constitute Cause if the General Partner determines, in
good faith, that such course of conduct was in the best interests of the
Partnership. The satisfaction of any indemnification obligation shall be from
and limited to Partnership assets, and no Limited Partner or BAC Holder shall
have any personal liability on account thereof. Notwithstanding any provision of
this subsection to the contrary, the General Partner shall be presumed to be
personally liable to creditors for the debts of the Partnership.
(b) Notwithstanding anything to the contrary contained in paragraph (a) above,
neither the General Partner, its Affiliates nor the Assignor Limited Partner,
any Person acting as a broker-dealer or the Partnership shall be indemnified
with regard to any liability, loss or damage incurred by them in connection with
any claim or settlement involving allegations that federal or state securities
laws, rules or regulations were violated by the General Partner or by any such
above listed Persons unless: (A) (i) the General Partner or other Persons
seeking indemnification are successful in defending such action on the merits of
each count involving such violation and the court approves indemnification of
the litigation costs, (ii) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction and the court approved
indemnification of the litigation costs or (iii) a court of competent
jurisdiction approves a settlement of such claims and finds that indemnification
of the settlement and related costs should be made and (B) such indemnification
is specifically approved by a court of law which shall have been advised as to
the then-current position of the Securities and Exchange Commission, the
Massachusetts Securities Commission, the Missouri Securities Commission,
Tennessee Securities Division and other applicable state securities laws
administrators regarding indemnification for violations of securities laws.
Notwithstanding the provisions of Section 5.08(a), the Assignor Limited Partner
shall not be indemnified by the Partnership against any loss, damage or
liability and related expenses (including attorneys' fees) incurred by reason of
any action or inaction performed or omitted to be performed by the Assignor
Limited Partner in connection with activities of the Assignor Limited Partner
acting exclusively in its capacity as Assignor
A-43
<Page>
Limited Partner on behalf of the BAC Holders. Further, to the extent the
Assignor Limited Partner otherwise would be entitled to indemnification pursuant
to Section 5.08(a), indemnification shall be provided only so long as the
Assignor Limited Partner is an Affiliate of the General Partner.
(c) The General Partner, its Affiliates, including the Assignor Limited Partner
may receive advances from the Partnership for payment of their costs and
attorneys' fees as incurred only if each of the following three conditions are
satisfied: (A) the legal action relates to the performance of duties or services
by the General Partner or its Affiliates on behalf of the Partnership (B) the
legal action is initiated by a third party who is not a Partner or BAC Holder
and (C) the General Partner, its Affiliates, including the Assignor Limited
Partner undertake to repay the advanced funds to the Partnership in cases in
which they are not entitled to indemnification pursuant to Section 5.08(a).
(d) The Partnership shall not incur the cost of liability insurance which
insures any party for any liability as to which such parties are prohibited from
being indemnified under this Section 5.08.
(e) For purposes of Sections 5.08(a), (b) and (c) only, "Affiliates" shall be
defined to mean any Person (A) performing services on behalf of the Partnership
who (1) directly or indirectly controls or is controlled by or is under common
control with the specified Person, (2) is an officer of, director of, partner in
or trustee of, or serves in a similar capacity with respect to, the specified
Person or of which the specified Person is an officer, director, partner or
trustee, or with respect to which the specified Person serves in a similar
capacity, (3) directly or indirectly is the beneficial owner of 10% or more of
any class of equity securities of the specified Person or of which the specified
Person is directly or indirectly the owner of 10% or more of the voting
securities of the specified Person or (4) is an officer, director, general
partner, trustee or holder of 10% or more of the voting securities of any of the
foregoing and (B) acting in a manner within the scope of authority granted to a
General Partner by this Agreement.
5.09. TAX STATUS OF PARTNERSHIP.
The General Partner shall use its best efforts to meet such requirements of the
Code, including any net worth requirements, as interpreted from time to time by
the Internal Revenue Service, any other agency of the federal government, or the
courts, necessary to assure that the Partnership will be classified as a
partnership for federal income tax purposes.
5.10. FIDUCIARY DUTY; DERIVATIVE ACTION.
The General Partner owes the same fiduciary duty to the BAC Holders as the
General Partner owes to the Limited Partners. An Assignee may bring a derivative
action to enforce a right of the Partnership to recover a
A-44
<Page>
judgment to the same extent as a Limited Partner has such a right. No BAC Holder
or Limited Partner may alter, by means of contract, the fiduciary duty owed to
him by the General Partner under common law.
5.11. AGENCY AGREEMENT.
The Partnership shall execute an Agency Agreement with the Dealer-Manager
pursuant to which said firm will assist the Partnership in the sale of BACs, be
paid Selling Commissions, accountable and non-accountable due diligence expense
reimbursements and a Dealer-Manager Fee therefor, all as described in Section
3.02, and be indemnified by the General Partner against certain liabilities.
Neither the General Partner nor the Assignor Limited Partner shall directly or
indirectly pay or award any commissions or other compensation to any Person
engaged by a potential Assignee for investment advice as an inducement to such
advisor to advise the purchaser of BACs; provided, however, that notwithstanding
the preceding sentence, sales commissions payable to a registered broker-dealer
or other properly licensed person shall not be prohibited.
5.12. RESTRICTIONS ON AUTHORITY TO DEAL WITH GENERAL PARTNER AND AFFILIATES.
Other than as specifically authorized in this Agreement or with respect to other
transactions unrelated to this Partnership, the Managing General Partner is
prohibited from entering into any agreements, contracts or arrangements on
behalf of the Partnership with any General Partner or any Affiliate of any
General Partner.
5.13. ADDITIONAL RESTRICTIONS ON THE GENERAL PARTNER.
(a) If any public offering is made by the General Partner or any of its
Affiliates of interests in a partnership or of beneficial assignee interests in
a partnership, which partnership intends to invest in investments which would
satisfy the same criteria and standards of investments to be made by the
Partnership, the following criteria will be followed with respect to determining
which entity should acquire such investments: The General Partner and its
Affiliates will review the investment portfolio of each such entity (including
any series being offered by each such partnership) and will in their sole
determination decide which such entity will acquire the investment on the basis
of various factors such as the amount of funds available and the length of time
such funds have been available for investment; the cash requirements of each
such entity; and the effect of the acquisition on each such entity's portfolio.
If funds should be available to two or more public limited partnerships to
purchase a given investment and all factors have been evaluated and deemed
equally applicable to each entity (including any series being offered by each
such partnership), then the General Partner and its Affiliates will acquire such
investments
A-45
<Page>
for the entities on a basis of rotation with the order of priority determined by
the dates of formation of the entities (including any series being offered by
each such partnership).
(b) No investment in any Operating Partnership will be made unless the General
Partner or its designee, exercising the rights of the Partnership (or such
designee) as a limited partner in an Operating Partnership, and in any event
acting on behalf of the Partnership, is provided certain rights under the terms
of the Operating Partnership Agreement substantially similar to the rights set
forth below: (i) the right to remove and replace the applicable Operating
General Partner(s) on the basis of the performance and discharge of the
Operating General Partner(s) obligations constituting Cause, (ii) the right to
approve or disapprove of certain transactions not in the ordinary courses of
business, including the right to approve or disapprove any sale or refinancing
of an Apartment Complex, (iii) the right to receive information and/or reports
with regard to the financial and physical condition of an Apartment Complex
owned by an Operating Partnership, (iv) the right to approve or disapprove the
dissolution of the applicable Operating Partnership, (v) the right to direct an
Operating General Partner to convene meetings and to submit matters to a vote,
(vi) the right to approve or disapprove amendments to the applicable Operating
Partnership Agreement materially and adversely affecting the Partnership's
investment in the Operating Partnership and (vii) the right to have access,
inspect and copy the books and records of the applicable Operating Partnership.
(c) Neither the General Partner nor its Affiliates (except the Partnership)
shall become a limited partner in an Operating Partnership whose Operating
General Partner is an Affiliate of the General Partner.
5.14. ACCOUNTING FEE ADVANCES.
In the event that the Partnership does not have sufficient funds in 2004 to pay
the fee to the Accountants for the preparation of Partnership tax returns and
other reports (the "Accounting Fee"); the General Partner shall advance up to
$5,000 to the Partnership to pay the Accounting Fee incurred with respect to
such year. Thereafter, the General Partner may, but shall not be obligated to,
advance funds to enable the Partnership to pay the Accounting Fee. Any amounts
so advanced (the "Accounting Fee Advances") shall be repaid by the Partnership
from the Cash Flow of the Partnership or, if applicable, from Liquidation, Sale
or Refinancing Process.
5.15. ASSET ACQUISITION FEE.
The General Partner or its Affiliates shall receive from the Partnership an
Asset Acquisition Fee for the services of the General Partner and/or its
Affiliate(s) in connection with selecting, evaluating and negotiating the terms
of investments in Operating Partnership Interests. The amount of the Asset
Acquisition Fee shall be equal to 8.5% of the Gross Proceeds,
A-46
<Page>
reduced by any Acquisition Fees paid to the General Partner or its Affiliates by
the Operating Partnerships or Operating General Partners. A pro rata portion of
such fee will be refunded to the Partnership to the extent that investments in
Operating Partnership Interests are not made. Notwithstanding the foregoing,
payment of the Asset Acquisition Fee described therein shall be payable only for
services actually rendered.
5.16. PARTNERSHIP MANAGEMENT FEE.
The Partnership shall pay the General Partner or an Affiliate thereof an annual
Partnership Management Fee commencing in 2004 of 0.5% of the Aggregate Cost of
the Apartment Complexes then held by the Operating Partnerships. The Partnership
Management Fee shall be payable, on a cumulative basis, solely from Cash Flow of
the Partnership, or from the proceeds of a Capital Transaction as provided in
Section 4.02. The Partnership Management Fee shall be prorated in 1993 based on
the number of months remaining in the year after the initial Investment Date. In
the event a reporting fee is paid to an Affiliate of the General Partner by an
Operating Partnership for services in preparing reports for such Operating
Partnership, the annual Partnership Management Fee will be reduced by the amount
of any such reporting fee to the extent the combined amounts of both fees exceed
0.5% of the Aggregate Cost of the Apartment Complexes on an annual basis.
ARTICLE VI
CHANGES IN GENERAL PARTNERS
6.01. WITHDRAWAL OF THE GENERAL PARTNER.
(a) Except in the event of the Bankruptcy or dissolution of the General Partner
as provided in Section 6.05, without the prior Consent of a majority in Interest
of the Limited Partners (including the Assignor Limited Partner voting as
instructed by the Assignees), Boston Capital Associates V L.L.C. shall not be
entitled to withdraw from the Partnership or to sell, transfer or assign its
Interest as General Partner. Upon such withdrawal by Boston Capital Associates V
L.L.C. and subject to the Consent of such number of Limited Partners (if any) as
are then required under the Delaware Revised Uniform Limited Partnership Act
(including the Assignor Limited Partner voting as instructed by the Assignees),
Boston Capital Associates V L.L.C. may substitute as General Partner in the
Partnership any entity which has, by merger, consolidation or otherwise,
acquired substantially all of its assets.
(b) In the event that Boston Capital Associates V L.L.C. withdraws from the
Partnership or sells, transfers or assigns its entire Interest, it shall be and
shall remain liable for all obligations and liabilities incurred by it as
A-47
<Page>
General Partner before such withdrawal, sale, transfer or assignment shall have
become effective, but shall be free of any obligation or liability incurred on
account of the activities of the Partnership from and after the time of such
withdrawal, sale, transfer or assignment shall have become effective.
(c) The General Partner may at any time designate additional Persons to be
General Partners, whose Interest(s) in the Partnership shall be such as agreed
upon by the General Partner and such additional General Partners, provided that
the Interests of the Assignees shall not be affected thereby.
Such additional Persons shall become additional General Partners only upon
meeting the conditions provided in Section 6.02.
6.02. ADMISSION OF A SUCCESSOR OR ADDITIONAL GENERAL PARTNER.
A Person shall be admitted as a General Partner of the Partnership only if the
following terms and conditions are satisfied:
(a) except as permitted in Section 6.01(a), the admission of such Person
shall have been Consented to, or ratified, by not less than a majority in
Interest of the Limited Partners (including the Assignor Limited Partner
voting as instructed by the Assignees) voting together as a class or by such
greater number of Limited Partners (including the Assignor Limited Partner)
as are then required under the Act to Consent to, or ratify, the admission of
a general partner;
(b) such Person shall have accepted and agreed to be bound by the terms and
provisions of this Agreement, by executing a counterpart hereof, and such
other documents or instruments as may be required or appropriate in order to
effect the admission of such Person as a General Partner shall have been
filed for recording, and all other actions required by law in connection with
such admission shall have been performed;
(c) if such Person is a corporation, it shall have provided the Partnership
with evidence satisfactory to counsel for the Partnership of its authority to
become a General Partner and to be bound by the terms and provisions of this
Agreement;
(d) counsel for the Partnership or the Limited Partners and Assignees, as the
case may be, shall have rendered an opinion to the Partnership that the
admission of such Person is in conformity with the Act and that none of the
actions taken in connection with the admission of such Person are in
violation of the Act, will impair the limited liability of the Assignees,
will cause the termination or dissolution of the Partnership or will cause
the Partnership to be classified other than as a partnership for federal
income tax purposes;
(e) the interests of the Assignees are not affected thereby.
A-48
<Page>
6.03. CONSENT OF ASSIGNEES AND LIMITED PARTNERS TO ADMISSION OF SUCCESSOR OR
ADDITIONAL GENERAL PARTNER.
Unless otherwise prohibited under the Act at the time that such Consent is
necessary, each of the Assignees by the execution of this Agreement by the
Assignor Limited Partner Consents to the admission of any Person as a successor
or additional General Partner to which at the time there has been given the
express Consent of a majority in Interest of the Limited Partners (including the
Assignor Limited Partner voting as instructed by the Assignees). Upon receipt of
such Consent of a majority in Interest of the Limited Partners (including the
Assignor Limited Partner voting as instructed by the Assignees), such admission
shall, without any further Consent or approval of the Limited Partners or the
Assignees, be the act of all the Limited Partners and Assignees.
6.04. REMOVAL OF A GENERAL PARTNER.
Subject to Section 10.02, a majority in Interest of the Limited Partners
(including the Assignor Limited Partner voting as instructed by the Assignees),
without the Consent or other action by the General Partner may remove any
General Partner and elect a replacement therefor.
6.05. EFFECT OF REMOVAL, BANKRUPTCY, DEATH, WITHDRAWAL, DISSOLUTION OR
INCOMPETENCY OF A GENERAL PARTNER.
(a) In the event of the Bankruptcy of a General Partner or the withdrawal, death
or dissolution of a General Partner or an adjudication that a General Partner is
incompetent (which term shall include, but not be limited to, insanity) the
business of the Partnership shall be continued with Partnership property by the
other General Partners (and the other General Partners, by execution of this
Agreement and/or an amendment hereto, as applicable, expressly so agree to
continue the business of the Partnership); provided, however, that if the
withdrawn, Bankrupt, deceased, dissolved or incompetent General Partner is then
the sole General Partner, the provisions of Section 8.01 shall be applicable.
(b) Upon the removal, withdrawal, Bankruptcy, death, dissolution or adjudication
of incompetency of a General Partner such General Partner shall immediately
cease to be a General Partner. The value of the General Partner's interest is to
be determined by agreement between the General Partner so removed and the
Partnership, or in the absence of such agreement, by arbitration in accordance
with the commercial arbitration rules of the American Arbitration Association.
The expense of arbitration shall be borne equally by the General Partner so
removed and the Partnership. If a General Partner is removed for cause, it shall
be required to sell its General Partner's interest at one-half its value to a
substitute General Partner. Any method of payment to a General Partner
involuntarily removed may be an interest bearing promissory note with a term of
no less than five
A-49
<Page>
years with equal annual installments bearing interest at the Prime Rate;
provided that such note will become due and payable when Liquidation, Sale or
Refinancing Proceeds with respect to the last Operating Partnership Interest
held by the Partnership are received. Any method of payment to a General Partner
that voluntarily withdraws from the Partnership will be in the form of a
non-interest bearing unsecured promissory note with principal payable, if at
all, from distributions which the withdrawing General Partner otherwise would
have received under this Partnership Agreement had it not withdrawn. Nothing in
this Section 6.05(b) shall affect any rights or liabilities of the Bankrupt,
deceased, dissolved or incompetent General Partner which matured prior to the
Bankruptcy, death, dissolution or incompetence of such General Partner.
(c) If, at the time of withdrawal, removal, Bankruptcy, death, dissolution or
adjudication of incompetence of a General Partner, the withdrawn, removed,
Bankrupt, deceased, dissolved or incompetent General Partner was not the sole
General Partner of the Partnership, the remaining General Partner or Partners
shall immediately (i) give Notice to the Limited Partners and Assignees of such
withdrawal, removal, Bankruptcy, death, dissolution or adjudication of
incompetence and (ii) prepare such amendments of this Agreement and execute and
file for recording such amendments or documents or other instruments necessary
to reflect the assignment, transfer, termination or conversion (as the case may
be) of the Interest of the withdrawn, removed, Bankrupt, deceased, dissolved or
incompetent General Partner.
(d) All parties hereto hereby agree to take all actions and to execute all
documents necessary or appropriate to effect the foregoing provisions of this
Section 6.05.
ARTICLE VII
TRANSFERABILITY OF LIMITED PARTNERS'
INTERESTS AND TRANSFERABILITY OF BACS
7.01. ASSIGNMENTS OF THE INTEREST OF THE ASSIGNOR LIMITED PARTNER.
(a) Pursuant to Section 11.01(a), the Assignor Limited Partner shall assign
units of beneficial interest in its Limited Partnership Interest to each Person
purchasing BACs pursuant to Section 3.03, each of which is equivalent to the
number of BACs so purchased. The Partnership shall recognize as an Assignee each
Person to whom the Assignor Limited Partner assigns such beneficial interests as
of such dates as provided in Section 3.03, provided that the Partnership has
received from each such Assignee proceeds in the amount of $10.00 (subject to
quantity discounts with respect to selling commissions) per BAC ($8.95 in the
case of the General Partner, its Affiliates and employees of its Affiliates) for
a minimum of 500 BACs.
A-50
<Page>
(b) The Assignor Limited Partner shall remain an Assignor Limited Partner on the
books and records of the Partnership notwithstanding the assignment of all of
the beneficial interest in its Limited Partnership Interest until such time as
the Assignor Limited Partner transfers its position as the Assignor Limited
Partner to another Person or Persons.
(c) All Persons becoming Assignees shall be bound by the terms and conditions
of, and shall be entitled to all rights of, Limited Partners under this
Agreement.
(d) Other than pursuant to this Section and Section 11.01(a), the Assignor
Limited Partner may not transfer or assign a beneficial interest in its
Partnership Interest without the prior written Consent of the Managing General
Partner or its designee.
7.02. CONVERSION OF BACs.
After the termination of the offering with respect to any series of BACs, on at
least a semi-annual basis, any BAC Holder who desires to convert his BACs into
Limited Partnership Interests may do so by fulfilling the requirements of
Section 7.03 for the admission of Substitute Limited Partners and the payment of
the legal and administrative costs and recording fees (currently estimated to be
$500). Persons who effect such conversion will receive one Limited Partnership
Interest for each BAC they convert and shall not thereafter be permitted to
re-exchange their Limited Partnership Interests for BACs. The Capital Account of
the Assignor Limited Partner shall be reduced by an amount equal to the Capital
Account of such former BAC Holder and such amount will be credited to such BAC
Holder's account as a Substitute Limited Partner. BACs which have been converted
into Limited Partnership Interests will be cancelled and will not be reissued.
Persons who convert BACs into Limited Partnership Interests may request and
receive from the Partnership BACs representing such Limited Partnership
Interests.
7.03. ASSIGNEES OF LIMITED PARTNERS; SUBSTITUTE LIMITED PARTNERS.
(a) The Partnership need not recognize for any purpose any assignment or
transfer of all or any fraction of the Partnership Interest of a Limited Partner
admitted to the Partnership pursuant to Sections 7.02, 10.02(b) or 11.04 unless
(i) the Partnership shall have received a fee in the amount established by it
from time to time sufficient to reimburse it for all its actual costs (currently
estimated to be $500) in connection with such assignment or transfer (applicable
only to transfers of Limited Partners admitted pursuant to Section 7.04), (ii)
the Partnership shall have received such evidence of the authority of the
parties to such assignment or transfer, including, but not by way of limitation,
certified corporate resolutions and BACs of fiduciary authority, as its counsel
may request and (iii) there shall have been filed with the Partnership and
recorded on the Partnership's
A-51
<Page>
books a duly executed and acknowledged counterpart of the instrument making such
assignment or transfer, and such instrument evidences the written acceptance by
the assignee of all of the terms and provisions of this Agreement, represents
that such assignment or transfer was made in accordance with all applicable laws
and regulations (including investor suitability requirements) and in all other
respects is satisfactory in form and substance to the General Partners. Except
as provided in Section 4.04(d), Substitute Limited Partners shall be recognized
as such no later than on the first day of the calendar month following the month
in which the Partnership receives the instrument of assignment provided in this
Section 7.02.
(b) Any Limited Partner who shall assign all his Partnership Interest shall
cease to be a Limited Partner of the Partnership, except that unless and until a
Substitute Limited Partner is admitted in his stead, such Limited Partner shall
retain the statutory rights of an assignor of a limited partnership interest
under the Delaware Revised Uniform Limited Partnership Act.
7.04. JOINT OWNERSHIP OF INTERESTS.
(a) Subject to the other provisions of this Agreement, Limited Partnership
Interests or BACs may be acquired by two or more individuals, who shall, at the
time they acquire such Limited Partnership Interests or BACs, indicate to the
Partnership whether the Limited Partnership Interests or BACs are being held by
them as joint tenants with the right of survivorship, as tenants-in-common or as
community property. In the absence of any such designation, they shall be
presumed to hold such Limited Partnership Interests or BACs as
tenants-in-common. Any Consent of the Limited Partners and Assignees shall
require the action or vote of all owners of any such jointly held Limited
Partnership Interests or BACs.
(b) Upon Notice to the Managing General Partner from all owners of any jointly
held Limited Partnership Interests or BACs and the submission of such
documentation as may be required, the General Partner shall (unless otherwise
instructed by the owners) cause the Limited Partnership Interests or BACs to be
divided into two or more equal portions, except that there may be no partial
Limited Partnership Interests or BACs in any such portion, which shall
thereafter be owned separately by each of the former owners.
7.05. ASSIGNABILITY OF BACs.
Subject to the provisions of this Agreement, including Section 11.04, the
General Partner in its discretion may cause the BACs to be freely transferable
by an Assignee to a Person who shall become a substitute Assignee. To the extent
such transfers are permitted, they will be subject to the following limitations:
(a) no transfer shall be permitted if it would result, when considered with
all other transactions in BACs and Partnership Interests within the
A-52
<Page>
previous twelve months, in the Partnership being considered to have been
terminated within the meaning of Section 708 of the Code;
(b) no transfer shall be permitted if such transfer of BACs would be in
violation of any applicable federal or state securities law (including any
investor suitability requirements);
(c) no transfer fee shall be imposed by the Partnership for the transfer of
BACs;
(d) any attempted transfer of BACs in contravention of the provisions of this
Section shall not be recognized by the Partnership;
(e) the Partnership shall recognize the transferee of a BAC as the BAC Holder
on the Partnership's books and records as of the last business day of the
calendar month during which the Partnership or its agent receives all
necessary documentation with respect to the transfer (unless such
documentation is received less than five business days prior to the last
business day of a calendar month, in which case the transferee will be
recognized as the BAC Holder on the last business day of the next calendar
month following such receipt);
(f) in order to record a trade on its books, the Partnership is under no
obligation to, but may require such evidence of transfer or assignment and
authority of the transferor or assignor (including signature guarantees), an
opinion of counsel to the effect that there has been no violation of federal
or state securities laws in the assignment or transfer, as the Managing
General Partner may determine;
(g) in order to record a trade on its books, the Partnership will require
evidence of the transferee's suitability under state securities laws and the
Code, as the Managing General Partner may determine.
ARTICLE VIII
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
8.01. EVENTS CAUSING DISSOLUTION.
(a) The Partnership shall dissolve upon the happening of any of the following
events:
(i) the Bankruptcy, death, dissolution, withdrawal, removal or adjudication
of incompetence of a General Partner who is at that time the sole General
Partner;
(ii) the passage of ninety (90) days after the Liquidation, Sale or
Refinancing of all Apartment Complexes and/or Operating Partnership
Interests, as applicable and this sale or other disposal substantially all
other tangible assets of the Partnership;
A-53
<Page>
(iii) the vote by a majority in Interest of the Limited Partners, or such
greater number as are then required under the Delaware Revised Uniform
Limited Partnership Act (including the Assignor Limited Partner voting as
instructed by the Assignees), pursuant to Section 10.02(a)(ii) to dissolve
the Partnership;
(iv) the expiration of the term of the Partnership specified in Section 1.04;
(v) any other event causing the dissolution of the Partnership under the laws
of the State of Delaware.
Notwithstanding the foregoing, the Partnership shall not be dissolved upon the
occurrence of the Bankruptcy, death, dissolution, withdrawal, removal or
adjudication of incompetence of a General Partner if (a) all of the remaining
General Partners, if applicable, elect within 30 days after such an event to
continue the business of the Partnership or (b) within 90 days, after the
withdrawal of a General Partner, all of the remaining Partners (including the
Assignor Limited Partner voting as instructed by a majority in Interest of the
Assignees or such greater number as is then required under the Act) agree in
writing to continue the business of the Partnership, and, if the General Partner
who became Bankrupt, died, dissolved, withdrew or was removed or adjudicated
incompetent was the sole General Partner, designates a substitute General
Partner. If all of the remaining General Partners elect to continue the
Partnership pursuant to (a) in the preceding sentence, and if the General
Partner who became Bankrupt, died, dissolved, withdrew or was removed or
adjudicated incompetent was the Managing General Partner, all of the rights and
obligations of the Managing General Partner hereunder shall be assumed by a
General Partner selected by the remaining General Partners or, if there is only
one remaining General Partner, by such sole remaining General Partner.
(b) Dissolution of the Partnership shall be effective on the day on which the
event occurs giving rise to the dissolution, but the Partnership shall not
terminate until a BAC of Cancellation shall be filed with the Delaware Secretary
of State and the assets of the Partnership shall have been distributed as
provided in Section 8.02. Notwithstanding the dissolution of the Partnership,
prior to the termination of the Partnership, the business of the Partnership and
the affairs of the Partners and Assignees shall continue to be governed by this
Agreement.
8.02. LIQUIDATION.
(a) Upon dissolution of the Partnership, the Managing General Partner or other
liquidator (the "Liquidator") shall liquidate the assets of the Partnership,
apply and distribute the proceeds thereof as contemplated by this Section 8.02
and cause the cancellation of the Partnership's BAC of limited partnership;
A-54
<Page>
(b) After payment of liabilities owing to creditors of the Partnership, the
Managing General Partner or the Liquidator shall set aside as a reserve such
amount as it deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership. Said reserve may be paid over by
the Managing General Partner or the Liquidator to a bank, to be held in escrow
for the purpose of paying any such contingent or unforeseen liabilities or
obligations and, at the expiration of such period as the Managing General
Partner or the Liquidator may deem advisable, the amount in such reserve shall
be distributed to the Partners and Assignees in the manner set forth in Section
8.02(c).
(c) After paying such liabilities and providing for such reserves, the Managing
General Partner or the Liquidator shall cause the remaining assets of the
Partnership to be distributed to the Partners or Assignees. All distributions to
the Partners or Assignees upon liquidation of the Partnership, shall be deemed
to be distributions arising from Liquidation, Sale or Refinancing and shall be
made as distributions of Liquidation, Sale or Refinancing Proceeds in accordance
with Section 4.02.
It is the intent of the Partners and Assignees that, upon liquidation of the
Partnership, all distributions to the Partners or Assignees be made in
accordance with the Partners' or Assignees' respective Capital Account balances
and the Partners and Assignees believe that distributions in accordance with
Section 4.02 will effectuate such intent. In the event that, upon liquidation,
there is any conflict between distributions pursuant to the Partners' or
Assignees' respective Capital Account balances and the intent of the Partners
and Assignees with respect to distributions as provided in Section 4.02, the
Liquidator shall, notwithstanding the provisions of Sections 4.01, 4.03 and
4.04, allocate the Partnership's gains and losses in a manner that will cause
the distribution of Liquidation, Sale or Refinancing Proceeds to the Partners or
Assignees to be in accordance with the Partners' or Assignees' respective
Capital Account balances. After paying such liabilities and providing for such
reserves, the Managing General Partner shall cause the remaining assets of the
Partnership to be distributed to the Partners or Assignees. All distributions to
the Partners or Assignees upon liquidation of the Partnership shall be deemed to
be distributions arising from a Liquidation, Sale or Refinancing and shall be
made as distributions of Liquidation, Sale or Refinancing Proceeds in accordance
with Section 4.02.
(d) If the Managing General Partner shall determine that an immediate sale of
part or all of the Partnership's assets would cause undue loss to the Partners
or Assignees, the Managing General Partner may, after having given Notice to all
the Limited Partners and Assignees, to the extent not then prohibited by any
applicable law of any jurisdiction in which the Partnership is then formed or
qualified defer liquidation of, and withold from distribution, for a reasonable
time any assets of the Partnership
A-55
<Page>
except those necessary to satisfy the Partnership's debts and obligations. No
distributions in kind shall be made.
(e) Upon dissolution of the Partnership, if there is no Managing General
Partner, such other Person who may be appointed in accordance with applicable
law shall be responsible to take all action related to the winding up and
distribution of assets of the Partnership and shall perform the actions of the
Managing General Partner described in this Section 8.02.
(f) Each Limited Partner or Assignee shall look solely to the assets of the
Partnership for all distributions with respect to the Partnership and his
Capital Contribution thereto and his share of Cash Available for Distribution,
Liquidation, Sale or Refinancing Proceeds, and Profits, Credits and Losses, and
shall have no recourse therefor, upon dissolution, or otherwise, against any
General Partner or Limited Partner or Assignee. No Partner or Assignee shall
have any right to demand or receive property other than cash upon dissolution
and termination of the Partnership. Nothing in this Section 8.02(f) shall alter
the limitation on liability of the General Partner or its Affiliates pursuant to
Section 5.08(a).
ARTICLE IX
BOOKS AND RECORDS, ACCOUNTING, REPORTS,
TAX MATTERS
9.01. BOOKS AND RECORDS.
(a) The Partnership shall maintain at the principal office of the Partnership
the following records, which are available for examination and copying there at
the request, and at the expense, of any Partner or Assignee or his duly
authorized representative during ordinary business hours or, copies of which may
be requested by any Partner or Assignee or his duly authorized representative
provided that the reasonable costs of fulfilling such request, including copying
expenses, shall be paid by the Person making such request:
(i) a current list, updated at least quarterly, of the full name and last
known home or business address and business telephone number of each Partner
and Assignee, set forth in alphabetical order and each Partners' or
Assignees' related interest in the Partnership. Any requests for copies of
said list shall be mailed within 10 days of the request thereof. A Partner or
Assignee may request a copy of said list, without limitation, for matters
relating to voting rights under the Agreement and the exercise of rights
under federal proxy laws.
(ii) a copy of the BAC and of this Agreement, together with executed copies
of any powers of attorney pursuant to which this Agreement, and any
amendments hereto, has been executed;
A-56
<Page>
(iii) copies of the Partnership's federal, state and local income tax returns
and reports, if any, for the three most recent years;
(iv) copies of (1) any effective written partnership agreements and (2) any
financial statements of the Partnership for the three most recent years;
(v) for a period of at least five years, copies of each appraisal received
pursuant to Section 5.05(f);
(vi) the Partnership books.
(b) The Managing General Partner or its agent or designee shall maintain for a
period of at least six years a record of the information obtained to indicate
that an Assignee meets the suitability standards set forth in the Prospectus.
(c) If a Partner or Assignee must compel production of the list set forth in
Section 9.01(a)(i), then the General Partner will pay the Partner's or
Assignee's actual costs and damages, including attorneys' fees. It shall be a
defense that the actual purpose and reason for the requests is to secure such
list or other information for the purpose of selling such list or copies
thereof, or of using the same for a commercial purpose other than in the
interest of the Partner or Assignee relative to the affairs of the Partnership.
The General Partner may require the requesting party to represent that the list
is not requested for a commercial purpose unrelated to the Partner's or
Assignee's interest in the Partnership. The remedies provided hereunder are in
addition to, and shall not in any way limit, other remedies available to
Partners or Assignees under federal law, or the laws of any state.
9.02. ACCOUNTING BASIS AND FISCAL YEAR.
The Partnership will initially utilize the accrual method of accounting. The
fiscal year of the Partnership shall begin on April 1st of each calendar year.
9.03. BANK ACCOUNTS.
The bank accounts of the Partnership shall be maintained in such banking
institutions as the Managing General Partner shall determine. All deposits and
other funds not immediately needed in the operation of the business may be
invested in Permitted Temporary Investments, as directed by the Managing General
Partner; provided, however, prior to the sale by the Partnership of the minimum
number of BACs, no funds paid by subscribers for BACs shall be invested in
tax-exempt notes or bonds. The funds of the Partnership shall not be commingled
with the funds of any other Person.
9.04. REPORTS.
(a) Within 45 days after the end of each of the first three fiscal quarters of
each year, the Managing General Partner shall send to each Person who was an
Assignee during such quarter certain unaudited financial information with
respect to the Partnership as of the end of, such fiscal quarter,
A-57
<Page>
together with a report of the activities of the Partnership during such fiscal
quarter.
(b) Within 120 days after the end of the fourth quarter in each fiscal year, the
Managing General Partner shall cause to be prepared and distributed to each
person who was an Assignee at any time during the quarter then ended (i) a
detailed statement describing (a) any new agreement, contract or arrangement
required to be reported by Section 5.03(b) and (b) the amount of all fees, other
compensation and amounts paid by the Partnership during such fiscal period to
any General Partner or any Affiliate of any General Partner which may be
included in the financial statements sent to BAC Holders and (ii) until the
Capital Contributions of the Assignees shall be fully invested, a report of
acquisitions of Operating Partnership Interest.
(c) The Managing General Partner shall send to each Person who was an Assignee
at any time during the year then ended such tax information as shall be
necessary for the preparation by such Assignee of his federal income tax return
and required state income and other tax returns with regard to jurisdictions in
which the Partnership is formed or qualified or owns investments. The Managing
General Partner shall send this information within 75 days after the end of each
year.
(d) Within 120 days after the end of each fiscal year, the Managing General
Partner shall send to each Person who was an Assignee at any time during the
fiscal year then ended (i) the balance sheet of the Partnership as of the end of
such year and statements of operations, changes in Partners' and Assignees'
capital and changes in financial position of the Partnership for such year, all
of which shall be prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Accountants containing an opinion
of the Accountants, (ii) a statement of Cash Available for Distribution for such
year (which need not be audited), (iii) a report of the activities of the
Partnership during such year and (iv) a statement (which need not be audited)
showing distributions per Unit by admission date at any time during such year in
respect of such year, which statement shall identify distributions from (a) Cash
Available for Distribution generated during the year, (b) Cash Available for
Distribution generated during prior years which has been held as reserves, (c)
proceeds from a Capital Transaction, (d) lease payments on net leases with
builders and sellers and (e) the Working Capital Reserve and other sources.
(e) A copy of each report referred to in this Section 9.04 shall be filed with
all securities commissions requiring such filing at the time required by such
commissions.
(f) If BACs are issued in series, all reports described in this Section 9.04
shall set forth required information for each series separately, as applicable.
A-58
<Page>
9.05. SECTION 754 ELECTIONS.
In the event of a transfer of all or any part of the Interest of an Assignee,
the Partnership may, but is not required to elect, pursuant to Section 754 of
the Code (or any corresponding provision of succeeding law), to adjust the basis
of the Partnership property.
9.06. DESIGNATION OF TAX MATTERS PARTNER.
The Managing General Partner is hereby authorized to designate itself or any
other General Partner, as Tax Matters Partner of the Partnership, as provided in
regulations pursuant to Section 6231 of the Code. Each Partner and Assignee, by
the execution of this Agreement consents to such designation of the Tax Matters
Partner and agrees to execute, certify, acknowledge, deliver, swear to, file and
record at the appropriate public offices such documents as may be necessary or
appropriate to evidence such consent.
9.07. DUTIES OF TAX MATTERS PARTNER.
(a) To the extent and in the manner provided by applicable law and regulations,
the Tax Matters Partner shall furnish the name, address, profits interest and
taxpayer identification number of each Partner and Assignee to the Secretary of
the Treasury or his delegate (the "Secretary").
(b) To the extent and in the manner provided by applicable law and regulations,
the Tax Matters Partner shall keep each Partner and Assignee informed of the
administrative and judicial proceedings for the adjustment at the Partnership or
Operating Partnership level of any item required to be taken into account by a
Partner and Assignee for income tax purposes (such administrative proceeding
referred to hereinafter as a "tax audit" and such judicial proceeding referred
to hereinafter as "judicial review").
(c) If the Tax Matters Partner, on behalf of the Partnership, receives a notice
with respect to a Partnership tax audit from the Secretary or from the Tax
Matters Partner of the Operating Partnership, the Tax Matters Partner shall,
within 30 days of receiving such notice forward a copy of such notice to the
Persons who hold or held an interest (through their Interest in the Partnership
or the BACs) in the Profits, Losses and Credits of such Operating Partnership
for the Operating Partnership taxable year to which the notice relates.
9.08. AUTHORITY OF TAX MATTERS PARTNER.
The Tax Matters Partner is hereby authorized, but not required:
(a) to enter into any settlement with the Internal Revenue Service or the
Secretary with respect to any tax audit or judicial review, in which agreement
the Tax Matters Partner may expressly state that such agreement shall bind the
other Partners or Assignees, except that such settlement
A-59
<Page>
agreement shall not bind any Partner or Assignee who (within the time prescribed
pursuant to the Code and regulations thereunder) files a statement with the
Secretary providing that the Tax Matters Partner shall not have the authority to
enter into a settlement agreement on the behalf of such Partner or Assignee;
(b) in the event that a notice of a final administrative adjustment at the
Partnership or Operating Partnership level of any item required to be taken into
account by a Partner or Assignee for tax purposes (a "final adjustment") is
mailed to the Tax Matters Partner, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax
Court, the District Court of the United States for the district in which the
Partnership's principal place of business is located, or the United States
Claims Court;
(c) to intervene in any action brought by any other Partner or Assignee for
judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the Secretary at any
time and, if any part of such request is not allowed by the Secretary, to file a
petition for judicial review with respect to such request;
(e) to enter into an agreement with the Internal Revenue Service to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Partner or Assignee for tax purposes, or an item
affected by such item;
(f) to take any other action on behalf of the Partners or Assignees or the
Partnership in connection with any administrative or judicial tax proceeding to
the extent permitted by applicable law or regulations.
9.09. EXPENSES OF TAX MATTERS PARTNER.
The Partnership shall indemnity and reimburse the Tax Matters Partner for all
expenses, including legal and accounting fees, claims, liabilities, losses and
damages incurred in connection with any administrative or judicial proceeding
with respect to the tax liability of the Partners or Assignees. The payment of
all such expenses shall be made before any distributions are made from Cash Flow
or the Working Capital Reserve are set aside by the Managing General Partner.
Neither the General Partner, or any Affiliate, nor any other Person shall have
any obligation to provide funds for such purpose. The taking of any action and
the incurring of any expense by the Tax Matters Partner in connection with any
such proceeding, except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Partner and the provisions on limitations of
liability of the General Partner and indemnification set forth in Section 5.08
of this Agreement shall be fully applicable to the Tax Matters Partner in its
capacity as such.
A-60
<Page>
ARTICLE X
MEETINGS AND VOTING RIGHTS OF LIMITED
PARTNERS AND ASSIGNEES
10.01. MEETINGS.
(a) Except as otherwise provided in Section 10.01(b), the Managing General
Partner may, and at the written request signed by 10% or more in Interest of the
Limited Partners (including the Assignor Limited Partner acting on behalf of and
at the instruction of the Assignees) shall, submit any matter to the Limited
Partners and Assignees upon which the Limited Partners and Assignees are
entitled to vote for a vote by written Consent without a meeting. With regard to
all matters to be brought before the Limited Partners, the Assignor Limited
Partner shall act for and at the direction of the Assignees.
(b) Meetings of the Limited Partners and Assignees for any purpose may be called
by the Managing General Partner at any time and, after receipt of a written
request for such a meeting signed by 10% or more in Interest of the Limited
Partners (including the Assignor Limited Partner acting on behalf of and at the
instruction of the Assignees) the Managing General Partner shall notify in
person or in writing by a certified mailing all Limited Partners (including the
Assignor Limited Partner) and Assignees of such request within ten days of
receiving such request. Any such request shall state the purpose of the proposed
meeting and the matters proposed to be acted upon thereat. Meetings shall be
held at the principal office of the Partnership or at such other place as may be
designated by the Managing General Partner or, if the meeting is called upon the
request of Assignees, as designated by such Assignees. In addition, the Managing
General Partner shall submit any matter upon which the Limited Partners
(including the Assignor Limited Partner acting on behalf of and at the
instruction of the Assignees) are entitled to act to the Limited Partners and
Assignees for a vote by written Consent without a meeting.
(c) Any meeting called pursuant to Section 10.01(b) shall be held not less than
15 days nor more than 60 days after the date of the receipt of the request for
such meeting. Notice to each Limited Partner and Assignee shall be given at his
record address, or at such other address which he may have furnished in writing
to the Managing General Partner or Assignor Limited Partner. Such Notice shall
state the place, date and hour of the meeting and shall indicate that the Notice
is being issued at the direction of, or by, the Partner or Partners calling the
meeting. Included with such notice shall be a detailed statement of the action
proposed, including a verbatim statement of the wording of any proposal to be
acted upon at the meeting. The Partnership will provide proxies or written
consents which provide for approval and disapproval of each matter to be
A-61
<Page>
acted upon at the meeting. If a meeting is adjourned to another time or place,
and if an announcement of the adjournment of time or place is made at the
meeting, it shall not be necessary to give Notice of the adjourned meeting. The
presence in person or by proxy of a majority in Interest of the Limited Partners
(including the Assignor Limited Partner acting on behalf of and at the
instruction of the Assignees) shall constitute a quorum at all meetings of the
Limited Partners and the Assignees; provided, however, that if there be no such
quorum, holders of a majority in Interest of the Limited Partners (including the
Assignor Limited Partner voting on behalf of the Assignees) so present or so
represented may adjourn the meeting from time to time without further Notice,
until a quorum shall have been obtained. No Notice of the time, place or purpose
of any meeting of Limited Partners and Assignees need be given to any Limited
Partner or Assignee who attends in person or is represented by proxy, except for
a Limited Partner or Assignee attending a meeting for the express purpose of
objecting at the beginning of the meeting to the transaction of any business on
the ground that the meeting is not lawfully called or convened, or to any
Limited Partner or Assignee entitled to such Notice who, in writing, executed
and filed with the records of the meeting, either before or after the time
thereof, waives such Notice.
(d) For the purpose of determining the Limited Partners entitled to vote on, or
to vote at, any meeting of the Limited Partners, or any adjournment thereof, or
to vote by written Consent without a meeting, and the Assignees entitled to
direct the voting of the Assignor Limited Partner on any such occasion, the
Managing General Partner or the Limited Partners requesting such meeting or vote
may fix, in advance, a date as the record date of any such determination of
Limited Partners and Assignees. Such date shall not be more than 50 days nor
less than 10 days before any such meeting or submission of a matter to the
Limited Partners and Assignees for a vote by written Consent.
(e) At each meeting of Limited Partners and Assignees, the Limited Partners and
Assignees present or represented by proxy shall elect such officers and adopt
such rules for the conduct of such meeting as they shall deem appropriate.
(f) The provisions of this Section 10.01 are subject to the provisions of
Section 12.11.
10.02. VOTING RIGHTS OF LIMITED PARTNERS AND ASSIGNEES.
(a) The consent of 80% in Interest of the Limited Partners (or of such greater
number of Limited Partners as are then required under the Act) (it being
understood that the Assignor Limited Partner is voting at the direction of the
Assignees), shall be required to approve any transaction involving the sale,
transfer or other disposition of all or substantially all of
A-62
<Page>
the assets of the Partnership when the consideration to be received by Limited
Partners or Assignees does not consist entirely of cash, prior to the
consummation of such transaction.
(b) A majority in Interest of the Limited Partners (or of such greater number of
Limited Partners as are then required under the Act) (it being understood that
the Assignor Limited Partner is voting at the direction of the Assignees),
without the concurrence of the General Partner, may: (i) amend this Agreement,
subject to the conditions that such amendment (a) may not in any manner allow
the Limited Partners or Assignees to take part in the management or control of
the Partnership's business or otherwise modify their limited liability and (b)
may not, without the Consent of the Partner affected and subject to the
provisions of Section 6.05(b), alter the rights, powers and duties of such
Partner as set forth in Article V, the interest of such Partner in Profits,
Credits and Losses, or Cash Available for Distribution, or Liquidation, Sale or
Refinancing Proceeds as set forth in this Agreement; (ii) dissolve the
Partnership, (iii) remove any General Partner and elect a replacement therefore,
(iv) approve or disapprove the sale of all or substantially all of the assets of
the Partnership at any one time (including the Partnership's interest in all of
the Operating Partnerships) and (v) advise the General Partner to: (a) remove
any Operating General Partner from an Operating Partnership or (b) disapprove
any material and adverse amendment to the Operating Partnership Agreement. If so
advised, the General Partner shall promptly take such action as may be required
to remove such Operating General Partner or to disapprove such amendment, in
accordance with the terms of the Operating Partnership Agreement. If the Limited
Partners (including the Assignor Limited Partner voting at the direction of the
Assignees) vote to remove a General Partner pursuant to this Section 10.02, they
shall provide the removed General Partner with Notice thereof, which Notice
shall set forth the date upon which such removal is to become effective.
(c) Any General Partner removed pursuant to this Section shall, upon such
removal, have the rights afforded to it pursuant to Section 6.05. Assignees, or
any successor General Partner proposed by them, shall have the option, but not
the obligation, to acquire, upon payment of any agreed upon value or the fair
market value therefor, the Interest in the Partnership of any General Partner so
removed. Any dispute as to fair market value shall be settled by arbitration in
accordance with the rules of the American Arbitration Association. The cost of
arbitration shall be borne equally by the removed General Partner and the
Partnership.
(d) Any General Partner removed pursuant to this Section shall remain liable for
all obligations and liabilities incurred by him as General Partner before such
removal shall have become effective, but shall be free of any obligation or
liability as General Partner incurred on account of the activities
A-63
<Page>
of the Partnership from and after the time such removal shall have become
effective.
(e) A Limited Partner shall be entitled to cast one vote for each Limited
Partnership Interest which he owns and an Assignee shall be entitled to direct
the Assignor Limited Partner to cast one vote for each BAC which he owns: (i) at
a meeting, in person, by written proxy or by a signed writing directing the
manner in which he desires that his vote be cast, which writing must be received
by the General Partner for each Limited Partner or the Assignor Limited Partner
for each Assignee prior to such meeting or (ii) without a meeting, by a signed
writing directing the manner in which he desires that his vote be cast, which
writing must be received by the General Partner for each Limited Partner or the
Assignor Limited Partner for each Assignee prior to the date upon which the
votes of Limited Partners and Assignees are to be counted. Every proxy must be
signed by the Limited Partner or Assignee or his attorney-in-fact. No proxy
shall be valid after the expiration of 12 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Limited Partner or Assignee executing it. Only the votes of Limited
Partners and Assignees of record on the Notice date, whether at a meeting or
otherwise, shall be counted. The General Partner shall not be entitled to vote.
The laws of the State of Delaware pertaining to the validity and use of
corporate proxies shall govern the validity and use of proxies given by the
Limited Partners. Assignees may give proxies only to the Assignor Limited
Partner. The Assignor Limited Partner will vote in accordance with the
directions of the Assignees so that each Interest of an Assignee will be voted
separately.
(f) The provisions of this Section 10.02 are subject to the provisions of
Section 12.11.
(g) Notwithstanding anything herein to the contrary, the General Partner and any
affiliated partnerships or corporations which purchased BACs may not vote as
Limited Partners and may not direct the Assignor Limited Partner to vote on
their behalf with respect to matters set forth in Section 10.02(b)(iii);
provided, however, that the above-described restriction shall not apply in the
event the BACs are listed for trading and the applicable stock exchange or
NASDAQ prohibits restrictions on voting rights of the BAC Holders or Limited
Partners.
(h) The merger or combination of the Partnership with another entity shall be
prohibited.
10.03. VOTING BY THE ASSIGNOR LIMITED PARTNER ON BEHALF OF BAC HOLDERS.
The Assignor Limited Partner hereby agrees that, with respect to any matter on
which a vote of the Limited Partners is taken, the Consent of the
A-64
<Page>
Limited Partners is required or any other action of the Limited partners is
required or permitted, it shall vote its Limited Partnership Interest or grant
such Consent or take such action (other than solely administrative actions as to
which the Assignor Limited Partner has no discretion) only for the sole benefit
of, and in accordance with the written instructions of the BAC Holders to which
units of beneficial interest in such Limited Partnership Interest have been
assigned. The General Partner shall provide notice to the BAC Holders containing
information regarding any matters to be voted upon or as to which any Consent or
other action is requested or proposed sufficiently in advance of the date of the
vote, Consent or action for which instructions are requested to permit BAC
Holders to provide written instructions and shall otherwise establish reasonable
procedures for any such request for instructions. The Partnership and the
General Partners hereby agree to permit BAC Holders to attend any meetings of
Partners and the Assignor Limited Partner shall, upon the written request of BAC
Holders owning BACs which represent in the aggregate 10% or more of all of the
outstanding BACs, request the General Partners to call a meeting of Partners
pursuant to Section 10.01 or to submit a matter to the Assignor Limited Partner
without a meeting pursuant to this Agreement. The General Partners shall give
the Limited Partners and BAC Holders Notice of any meeting to be held pursuant
to Section 10.01(a) or (b) at the same time and manner as such Notice is
required to be given to the Assignor Limited Partner pursuant to Section
10.01(c).
10.04. MANAGEMENT OF THE PARTNERSHIP.
No Limited Partner or Assignee shall take part in the management or control of
the business of the Partnership or transact any business in the name of the
Partnership. No Limited Partner or Assignee shall have the power or authority to
bind the Partnership or to sign any agreement or document in the name of the
Partnership. No Limited Partner or Assignee shall have any power or authority
with respect to the Partnership except insofar as the Consent of the Limited
Partners or Assignees shall be expressly required.
10.05. OTHER ACTIVITIES.
The Limited Partners and Assignees may engage in or possess interests in other
business ventures of every kind and description for their own accounts,
including without limitation, serving as general or limited partner of other
partnerships which own, either directly or through interests in other
partnerships, apartment complexes similar to the Apartment Complexes. Neither
the Partnership nor any of the Partners or Assignees shall have any rights by
virtue of this Agreement in or to such business ventures or to the income or
profits derived therefrom.
A-65
<Page>
ARTICLE XI
ASSIGNMENT OF BENEFICIAL INTERESTS
TO ASSIGNEES AND RIGHTS OF ASSIGNEES
11.01. ASSIGNMENT OF BENEFICIAL INTERESTS TO ASSIGNEES.
(a) The Assignor Limited Partner, by the execution of this Agreement,
irrevocably transfers and assigns to the Assignees all of the Assignor Limited
Partner's rights and beneficial interest in and to the Limited Partnership
Interest held by the Assignor Limited Partner, such transfer and assignment made
in the number of units equal to the number of BACs purchased by each such Person
no later than the next business day following the day such Person's funds are
released to the Partnership, on behalf of the Assignor Limited Partner, of any
proceeds from the Offering. The rights and interest so transferred and assigned
shall include the following:
(i) all rights to receive distributions of Capital Contributions pursuant to
Section 3.04(c);
(ii) all rights with respect to profits, credits, losses and cash
distributions pursuant to Article IV;
(iii) all rights to receive any proceeds of sales or refinancings pursuant to
Section 4.02 or liquidation of the Partnership pursuant to Section 8.02;
(iv) all rights to inspect books and records and to receive reports pursuant
to Article IX;
(v) all rights which Limited Partners have, or may have in the future, under
the Act, except as otherwise provided herein.
(b) The General Partner, by the execution of this Agreement, irrevocably
Consents to and acknowledges that (i) the transfer and assignment pursuant to
Section 11.01(a) by the Assignor Limited Partner to the Assignees of the
Assignor Limited Partner's rights and beneficial interest in its Limited
Partnership Interest is effective and (ii) the Assignees are intended to be
third party beneficiaries of all rights and privileges of the Assignor Limited
Partner in respect of its Limited Partnership Interest. The General Partner
covenants and agrees that, in accordance with the foregoing transfer and
assignment, all the Assignor Limited Partner's rights and privileges may be
exercised by the Assignees.
11.02. RIGHTS OF ASSIGNEES OF THE ASSIGNOR LIMITED PARTNER.
(a) The Assignees shall share pari passu on the basis of one unit of beneficial
interest in the Assignor Limited Partner's Limited Partnership Interest for one
BAC, and shall be considered as a single class with respect to all rights to
receive distributions of Net Cash Flow, Liquidation, Sale or
A-66
<Page>
Refinancing Proceeds, allocations of Profits, Credits and Losses, and other
determinations of allocations and distributions pursuant to this Agreement.
(b) Limited Partners (including the Assignor Limited Partner voting the
Interests of the Assignees at their direction) shall vote on all matters in
respect of which they are entitled to vote (either in person, by proxy or by
written Consent), as a single class with each Limited Partner entitled to one
vote per Partnership Interest and each BAC Holder entitled to one vote per BAC
through the Assignor Limited Partner.
11.03. FIDUCIARY DUTY OF ASSIGNOR.
Pursuant to Section VII.E.3. of the NASAA Guidelines and in conformance with the
terms of this Agreement, the Assignor shall have fiduciary responsibility for
the safekeeping of any funds and assets of the Assignees and shall not permit
the use of such funds and assets other than for the benefit of the Assignees.
11.04. PRESERVATION OF TAX STATUS AND PRESERVATION OF PARTNERSHIP STATUS.
(a) The Managing General Partner may, upon advice of counsel, restrict, halt or
suspend trading of BACs to prevent a termination of the Partnership for federal
income tax purposes which is deemed harmful to the Assignees. In the event of
such suspension, the transferring or assigning Assignee will be notified in such
event, and any deferred transfers or assignments will be affected (in
chronological order to the extent practicable), as of the first day of the next
succeeding period in which such transfers or assignments can be affected without
either premature termination of the Partnership for tax purposes or any adverse
effects from such premature termination, as the case may be. In the event
transfers or assignments are suspended for the foregoing reasons, the General
Partner will give notice of such suspension to Assignees as soon as practicable.
(b) The Managing General Partner may, upon advice of counsel, (i) restrict or
halt trading in BACs, (ii) cause the delisting of BACs from public trading
markets, (iii) require a purchaser of BACs (at no additional cost) to be
admitted to the Partnership as a Limited Partner, (iv) require a BAC Holder (at
no additional cost) to become a Limited Partner, and/or (v) take such other
action with respect to the manner in which BACs are being or may be transferred
or traded, as it may deem necessary or appropriate (including causing the
amendment of this Agreement in connection therewith), in order to preserve the
status of the Partnership as a partnership, prevent a termination of the
Partnership for federal income tax purposes which is deemed harmful to the
Assignees, prevent federal income tax treatment of the Partnership as an
association taxable as a corporation, insure that BAC Holders will be treated as
limited partners of the Partnership for state law and federal income tax
purposes and/or qualify
A-67
<Page>
the Partnership as a pass-through entity pursuant to the provisions of any
future legislation.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. APPOINTMENT OF MANAGING GENERAL PARTNER AS ATTORNEY-IN-FACT.
(a) Each Limited Partner, including each Substitute Limited Partner, by the
execution of this Agreement, irrevocably constitutes and appoints, with full
power of substitution, the Managing General Partner, acting through any partner
of its general partner, his true and lawful attorney-in-fact with full power and
authority in his name, place and stead to execute, certify, acknowledge,
deliver, swear to, file and record at the appropriate public offices this
Agreement, and such other documents as may be necessary or appropriate to carry
out the provisions of this Agreement, including but not limited to:
(i) all BACs and other instruments (including counterparts of this
Agreement), and any amendment thereof, which any such Person deems
appropriate to form, qualify or continue the Partnership as a limited
partnership (or a partnership in which the Limited Partners will have limited
liability comparable to that provided by the Delaware Revised Uniform Limited
Partnership Act on the date thereof) in a jurisdiction in which the
Partnership may conduct business or in which such formation, qualification or
continuation is, in the opinion of any such Person, necessary to protect the
limited liability of the Limited Partners and Assignees;
(ii) any other instrument or document which may be required to be filed by
the Partnership under Federal law or under the laws of any state in which any
such Person deems it advisable to file;
(iii) all amendments to this Agreement adopted in accordance with the terms
hereof and all instruments which any such Person deems appropriate to reflect
a change or modification of the Partnership in accordance with the terms of
this Agreement;
(iv) any instrument or document, including amendments to this Agreement,
which may be required to (A) effect the continuation of the Partnership, the
admission of any Limited Partners, any Substitute Limited Partner or any
additional or successor General Partner, or the dissolution and termination
of the Partnership (provided such continuation, admission or dissolution and
termination are in accordance with the terms of this Agreement), (B) to
reflect any reductions in amount of contributions of Partners or (C) to make
a correction to any Exhibit thereto.
A-68
<Page>
(b) The appointment by each Limited Partner of each of such Persons as his
attorney-in-fact is irrevocable and shall be deemed to be a power coupled with
an interest, in recognition of the fact that each of the Partners under this
Agreement will be relying upon the power of such Persons to act as contemplated
by this Agreement in any filing and other action by them on behalf of the
Partnership, and such power shall survive the removal, Bankruptcy, death,
incompetence or dissolution of any Person hereby giving such power and the
transfer or assignment of all or any part of the BACs or Partnership Interests
of such Person; provided, however, that in the event of a transfer by a Limited
Partner or a BAC Holder of all or any part of his Interests, the foregoing power
of attorney of a transferor Limited Partner or BAC Holder shall survive such
transfer only until such time as the transferee shall have been admitted to the
Partnership as a Substitute Limited Partner and all required documents and
instruments shall have been duly executed, filed and recorded to effect such
substitution.
12.02. SIGNATURES; AMENDMENTS.
(a) Each Limited Partner, additional General Partner and successor General
Partner shall become a signatory hereto by signing such number of counterpart
signature pages to this Agreement and such other instrument or instruments in
such manner and at such time as the Managing General Partner shall determine. By
so signing, each Limited Partner, successor General Partner or additional
General Partner, as the case may be, shall be deemed to have adopted, and to
have agreed to be bound by, all the provisions of this Agreement, as amended
from time to time; provided, however, that no such counterpart shall be binding
if and until it shall have been accepted by the Managing General Partner.
(b) In addition to any amendments otherwise authorized herein, amendments may be
made to this Agreement from time to time by the General Partner, without the
Consent of the Limited Partners (or the Assignees), (i) to add to the
representations, duties or obligations of the General Partner or surrender any
right or power granted to the General Partner herein, (ii) to cure any ambiguity
or correct or supplement any provision herein which may be inconsistent with the
manifest intent of this Agreement or the administrative efficiency of the
Partnership and (iii) to delete or add any provision of this Agreement required
to be deleted or added by the staff of the Securities and Exchange Commission or
other federal agency or by a state "Blue Sky" commissioner or similar official,
or by any national securities exchange or NASDAQ, which addition or deletion is
deemed by such Commission, agency, entity or official to be for the benefit or
protection of Limited Partners or the Assignees; provided, however, that no
amendment shall be adopted pursuant to this Section 12.02(b) unless the adoption
thereof (1) is for the benefit of, or not adverse to the interests of, the
Limited Partners and the Assignees, (2) is not inconsistent with Section
A-69
<Page>
5.01,(3) does not affect the distribution of Cash Available for Distribution or
Liquidation, Sale or Refinancing Proceeds or the allocation of Profits, Credits
and Losses among the Limited Partners or the Assignees and (4) does not affect
the limited liability of the Limited Partners or the Assignees or the status of
the Partnership as a partnership for federal income tax purposes.
(c) If this Agreement shall be amended as a result of substituting a Limited
Partner, the amendment to this Agreement shall be signed by the Managing General
Partner and by the Person to be substituted (which signature of the Person to be
substituted may be made by such Person's attorney-in-fact), and if a Limited
Partner is to be substituted, either by the assigning Limited Partner or by the
Managing General Partner pursuant to its authority to act as Attorney-in-Fact on
behalf of the assigning Limited Partner. If this Agreement shall be amended to
reflect the designation of an additional General Partner, such amendment shall
be signed by the other General Partners and by such additional General Partner.
If this Agreement shall be amended to reflect the withdrawal of a General
Partner when the business of the Partnership is being continued, such amendment
shall be signed by the withdrawing General Partner and by the remaining or
successor General Partner or Partners.
(d) In making any amendments, there shall be prepared and filed by the Managing
General Partner for recording such documents and BACs if and to the extent
required to be prepared and filed under the Act.
12.03. OWNERSHIP BY LIMITED PARTNERS OR ASSIGNEES OF GENERAL PARTNER OR ITS
AFFILIATES.
No Limited Partner or Assignee shall at any time, either directly or indirectly,
own any stock or other interest in any General Partner or in any Affiliate of
any General Partner if such ownership by itself or in conjunction with the stock
or other interest owned by other Limited Partners and Assignees would, in the
opinion of counsel for the Partnership, jeopardize the classification of the
Partnership as a partnership for federal income tax purposes. Each Limited
Partner and Assignee shall promptly supply any information requested by the
Managing General Partner in order to establish compliance by the Limited Partner
or Assignee with the provisions of this Section 12.03.
12.04. BINDING PROVISIONS.
The covenants and agreements contained herein shall be binding upon, and inure
to the benefit of, the heirs, executors, administrators, personal
representatives, successors and assigns of the respective parties hereto.
A-70
<Page>
12.05. APPLICABLE LAW.
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware provided, however, that causes of action
for violations of federal or state securities laws shall not be governed by this
section.
12.06. COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which together
shall constitute one agreement binding on all parties hereto, notwithstanding
that all the parties have not signed the same counterpart, except that no
counterpart shall be binding unless signed by the Managing General Partner.
12.07. SEPARABILITY OF PROVISIONS.
Each provision of this Agreement shall be considered separable and if for any
reason any provision or provisions hereof are determined to be invalid and
contrary to any law, such invalidity shall not impair the operation of or affect
those portions of this Agreement which are valid.
12.08. CAPTIONS.
Article and Section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
12.09. DISALLOWANCE OF EXPENSES.
Any fee paid to any General Partner pursuant to this Agreement which is
disallowed as a deductible expense for federal income tax purposes shall
constitute, for federal income tax purposes, a special allocation of gross
income to the General Partner receiving such fee.
12.10. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto, sets forth all (and
is intended by all parties to be an integration of all) of the promises,
agreements and understandings among the parties hereto with respect to the
Partnership, the Partnership business and the property of the Partnership, and
there are no promises, agreements, or understandings, oral or written, express
or implied, among them other than as set forth or incorporated herein.
12.11. SERIES TREATED AS SEPARATE PARTNERSHIPS; EXCEPTIONS.
(a) Except as otherwise provided in Section 12.11(b), this Partnership Agreement
shall apply to each series of BACs as though each such series were a separate
partnership and the terms set forth herein shall be applied identically in each
series. The General Partners shall maintain separate bank accounts and books and
records for each series and shall
A-71
<Page>
credit income and apportion Operating Expenses and other costs which are not
specifically allocable to a particular series among all outstanding series upon
the advice of the Accountants.
(b) Section 12.11(a) shall not apply in the following instances:
(i) if the topics of a meeting or a vote without a meeting concern more than
one series of BACs, then for purposes of Section 10.01 all affected series
will be combined and treated as a single class;
(ii) the right of Limited Partners and Assignees set forth in Sections
10.02(a) and (b) may be exercised only by a majority in interest (or such
greater percentage as is then required under the Act) of the Limited Partners
of all affected series (including the Assignor Limited Partner acting for and
at the direction of BAC Holders of all affected series) voting as a single
class.
(c) In the event that a creditor asserts a claim against the assets of the
Partnership and it can be determined by the nature of the creditor's claim that
such claim is attributable to one series only, and that series' funds are
insufficient to satisfy the claim, then the General Partner will assume
liability for any unsatisfied portion of the creditor's claim. In the event of
such claim against more than one series, if the proportional liability of a
particular series can be determined, such series will only be liable for such
proportional amount of the claim; if such series' funds are insufficient to
satisfy the proportional amount of the claim, the General Partner will assume
liability for any unsatisfied portion thereof.
IN WITNESS WHEREOF, the parties hereto hereunder affix their signatures and
seals on October 15, 2003.
GENERAL PARTNER:
BOSTON CAPITAL ASSOCIATES V L.L.C.
By: /s/ John P. Manning
--------------------------------
John P. Manning
Managing Member
ASSIGNOR LIMITED PARTNER:
BCTC V ASSIGNOR CORP.
By: /s/ John P. Manning
--------------------------------
John P. Manning
President
A-72
<Page>
BOSTON CAPITAL BOSTON CAPITAL TAX CREDIT FUND V INVESTOR FORM
-----------------------------------------------
I. INVESTOR INFORMATION (Please Type or Print Clearly)
/ / This investment is for Series___________
/ / I have previously invested in Series___________
Individual Name Social Security Number
_______________________________________________ _______________________________
Joint Name Social Security Number
_______________________________________________ _______________________________
Entity Name Taxpayer Identification Number
_______________________________________________ _______________________________
Home Address
________________________________________________________________________________
City State Zip Code Home Telephone
______________ ________________ _____________ _______________________________
Occupation Fax Number (OPTIONAL) E-mail Address
______________ _______________________________ _______________________________
Check One / / Mr. / / Mrs. / / Ms. / / Mr. & Mrs. / / Dr. / / Other____________
II. LEGAL FORM OF OWNERSHIP
/ / Individual (01)
/ / JTWROS (08)
/ / Community Property (15)
/ / Tenants in Common (09)
/ / Partnership (04)
/ / Corporation (05)
/ / Grantor Trust/Living Trust (07)
/ / Other (specify)____________
III. INVESTMENT INFORMATION
Investment Amount $________________ Minimum Investment: $5,000 (Additional
increments: $1,000)
MAKE CHECKS PAYABLE TO: "WB&T/BCTC FUND V ESCROW ACCOUNT"
IV. INVESTOR SIGNATURE (IF REQUIRED)
Investors who are residents of the states of Alabama, Arizona, Arkansas,
California, Iowa, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nebraska,
New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, South
Dakota, Texas, Washington, and Wisconsin must make the following representations
and sign below. In addition, certain Soliciting Dealers have internally
determined that Investor Signatures will be required. Each Account Executive
should consult with his or her central office regarding an Investor Signature
requirement. If there is such a requirement, please have your client complete
the information and make the representations that follow by signing below.
I hereby confirm that I have received a Prospectus relating to the offering of
Beneficial Assignee Certificates ("BACs") representing assignments of limited
partnership interests in Boston Capital Tax Credit Fund V L.P. and that I meet
the minimum suitability standards regarding annual income and net worth as
disclosed in the Prospectus.
Signature of First Investor Date
- -------------------------------------------------
Signature of Second Investor Date
- -------------------------------------------------
FOR INTERNAL USE ONLY
B/D No. Check No. - CONTINUED ON THE OTHER SIDE
________________ _______________
<Page>
BOSTON CAPITAL TAX CREDIT FUND V INVESTOR FORM
-----------------------------------------------
side two
- --------------------------------------------------------------------------------
V. BROKER/DEALER INFORMATION
/ / Please check if new address
Account Executive Broker/Dealer Firm
__________________________________ _______________________________
Account Executive's Branch Address
________________________________________________________________________________
City State Zip Code Telephone
___________________ __________________ ________________ _____________________
Fax Number (OPTIONAL) E-mail Address
____________________________________ _____________________
The undersigned represents that he has complied with the requirements of the
rules of fair practice of the NASD with respect to the subscriber whose name
appears on the above Investor Form and hereby certifies that he has reasonable
grounds to believe on the basis of information obtained from the investor
concerning his objectives, financial situation and needs and any other
information known to the undersigned that the investment in the interests is
suitable for the investor, and, in addition, has informed the investor as to the
lack of liquidity and marketability of the interests.
Account Executive's Signature and/or Branch Manager Date
_________________________________________________________ _____________________
MAKE CHECKS PAYABLE TO: "WB&T/BCTC FUND V ESCROW ACCOUNT"
Submit Documents To: BOSTON CAPITAL SERVICES
ESCROW ADMINISTRATOR
ONE BOSTON PLACE, SUITE 2100
BOSTON, MASSACHUSETTS 02108-4406
(617) 624-8900 OR (800) 866-2282
<Page>
BOSTON CAPITAL
TAX CREDIT FUND V L.P.
[GRAPHIC]
PROSPECTUS
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Suitability of an Investment in Certificates 3
Summary 14
Additional Summary Information for Corporate Investors 27
Estimated Use of Proceeds 32
Risk Factors 34
Fiduciary Responsibility of Boston Associates 43
Conflicts of Interest 45
Compensation and Fees 51
Investment Objectives and Acquisition Policies 55
Investment in Operating Partnerships 71
Tax Credit Programs 72
Government Assistance Programs 83
Management 94
Prior Performance of Boston Associates and Its Affiliates 100
Description of Certificates 105
Sharing Arrangements: Profits, Credits, Losses, Net Cash Flow and Residuals 108
Federal Income Tax Matters 112
The Offering 161
Summary of Provisions of the Fund Agreement 167
Sales Literature 173
Experts 173
Investor Reports 173
Legal Matters 174
Registration Statement 174
Glossary 174
Reports of Independent Certified Public Accountants, Financial
Statements and Tabular Information Concerning Prior Limited
Partnerships I-1
Exhibit A--Fund Agreement A-1
Exhibit B--Investor Form B-1
</Table>
BOSTON CAPITAL SERVICES, INC
One Boston Place, Suite 2100
Boston, MA 02108-4406
(617) 624-8900 or (800) 866-2282
www.BostonCapital.com
For a period of ninety days after the date of this Prospectus, all dealers
effecting transactions in the registered securities, whether or not
participating in the distribution, may be required to deliver a prospectus. This
obligation is in addition to the obligation of dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.