Begonia Partnership0X-XX12346Tax Year Ended:December 31, 2007Explanation of Adjustments(1) Other IncomeIt is determined that other income is $93,000.00 and not $60,000.00 as shown on your return. Accordingly, the amount reported as other income is increased by $33,000.00.(2) Depreciation ExpenseIt is determined that the basis of the new 5-year recovery property eligible for energy credit is $400,000.00 instead of the $600,000.00 shown on your return. Accordingly, the amount of property eligible for energy credit is decreased by $200,000.00. It is further determined that the depreciation deduction of $60,000.00, as shown in Exhibit 1, is allowable instead of the $90,000.00 shown on your return. Therefore, ordinary income is increased by $30,000.00. (3) Repair Expense *The deduction of $12,000.00 shown on your return is not allowed because it has not been shown that the amounts claimed were ordinary and necessary expenses paid or accrued during the taxable year in carrying on any trade or business. Accordingly, the repair expense is reduced by $12,000.00.(4) Section 1231 Gain *It is determined that your Section 1231 gain from the sale of assets is $1,500,000.00 and not $500,000.00 as shown on your return. Accordingly, the amount reported as Section 1231 Gain is increased by $1,000,000.00.(5) Negligence PenaltyIt is determined that the partnership improperly took deductions and/or credits due to negligence or intentional disregard of rules and regulations. IRC Section 6662 is applicable at the individual partner level and is asserted in this proceeding.(6) Capital Contributions Made During the 2007 YearIt is determined that the capital contributions made during the 2007 year were $450,000.00 and not $600,000.00 as shown on your return. Accordingly, the capital contributions are decreased by $150,000.00.(7) Forgiveness of Debt Income *It is determined that your forgiveness of debt income was $1,500,000.00 and not $500,000.00 as shown on your return. Accordingly, the forgiveness of debt income is increased by $1,000,000.00.*These items have previously been agreed to by (insert number) partners. Note to Tax Computation Specialists: The Schedule of Adjustments should also identify the agreed adjustments with an asterisk and should include the following statement in the Remarks section:*These items have previously been agreed to by (insert number) of the partners.