Audit of Tax Returns. 63 Investment By Tax-Exempt Investors.......................................... 63
Audit of Tax Returns. The General Partners understand that the Service is paying increased attention to the proper application of the tax laws to partnerships. While the Partnership is not being formed so as to allow investors to avail themselves of losses or deductions generated by the Partnership, the Service still may choose to audit the Partnership's information returns. An audit of the Partnership's information returns may precipitate an audit of the income tax returns of Limited Partners. Any expense involved in an audit of a Limited Partner's returns must be borne by such Limited Partner. Prospective investors should also be aware that if the Service successfully asserts a position to adjust any item of income, gain, deduction or loss reported on a Partnership information return, corresponding adjustments would be made to the income tax returns of Limited Partners. Further, any such audit might result in Service adjustments to items of non-Partnership income or loss. If a tax deficiency is determined, the taxpayer is liable for interest on such deficiency from the due date of the return. Interest on underpayment is payable at the federal short-term rate plus three percentage points, rounded to the nearest full percent (rounding up in the case of a multiple of one-half of one percent). The federal short-term rate is determined for the first month of each quarter, and the rate so determined governs the calculation of the rate of interest on underpayment for calendar quarter after the quarter during the first month of which the rate is so determined. The "federal short-term rate" for a month is determined by the Service based on the average market yield on outstanding marketable obligations of the United States with remaining periods to maturity of three years or less. In the case of any "substantial underpayment" attributable to a "tax motivated transaction," the interest rate on underpayment is one hundred twenty percent (120%) of the interest rate that otherwise apply. A "substantial underpayment" is any underpayment of tax in excess of $1,000 attributable to one or more "tax motivated transaction," which is defined to include (among other things) certain valuation overstatements, any use which may result in a substantial distortion of income for any period, and any sham or fraudulent transaction. The tax treatment of items of partnership income, gain, loss, deductions or credit is to be determined at the partnership level in a unified partnership proceeding, rather than...
Audit of Tax Returns. In the event that a taxing or governmental authority should audit the Tax Returns of the Companies for periods ending no later than the Closing Date, Buyer shall cause the Companies to cooperate with Sellers and make available to Sellers certain records of the Companies as set forth in Section 3.10 hereof. Concerning the results of such an audit:
Audit of Tax Returns. Schedule 3.1(k) lists (A) all federal, state, local, and foreign income Tax Returns filed with respect to Company and each subsidiary of Company for taxable periods ended on or after January 1, 2001, (B) those Tax Returns that have been audited, and
