America First Tax Exempt Investors, L.P.

Adjusted Basis Worksheet

The following is summarized detailed information that you need to prepare your tax returns from your enclosed Schedule K-I.

Line 5 – Portfolio Income – Interest – This is your share of the partnership’s interest income from properties held and temporary investments. This should be reported on Schedule B (Form 1040), Interest and Ordinary Dividends, Part 1, Line 1.

Line 13 – Other deductions – This is your share of the partnership’s ordinary and necessary operating expenses that were incurred to generate the interest and dividend income. These expenses should be reported on Schedule A (Form 1040) Itemized Deductions, line 22.

Line 18 – Nondeductible expenses – This represents your share of the expenses that are not deductible for income tax purposes.

Line 19 – Distributions of money (cash and marketable securities) – This shows the distributions the partnership paid to you during 2004. You should include this item in calculating your adjusted basis in the partnership.

Line 20 – Other information, Code A – This represents your share of total investment income earned by the partnership. Report on Form 4952, line 4a if applicable.

Line 20 – Other information, Code B – This represents your share of total investment expenses incurred by the partnership. Report on Form 4952, line 5 if applicable.

Other Information Provided by Partnership – State Breakdown of Line 2, net income (loss) from rental real estate activities – This represents the breakdown of the income or (loss) by the states to which the income or (loss) is attributable. This income or (loss) may be taxable or deductible within the state in which it was earned. If the partnership owns property or is conducting business in a state in which you do not reside, you may be required to file a nonresident income tax return in that state. Since state and local income tax laws vary considerably, you should consult with your tax advisor or the state taxing authorities regarding these filing requirements.

Sale or exchange of Units – Sale of units during 2004. If you sold your units, the gain or loss is measured by comparing the sales price minus selling expenses to your adjusted basis in the partnership. Your adjusted basis can be calculated using all previous K-1s you received as shown below. Please consult your tax professional with any questions. Payments received for partial units or notes should be treated as a sale.

Adjusted basis brought over from Capital Source, L.P. – A, Capital Source II, LP – A or your Original Purchase Price:

$____

Basis Adjustments from Reconciliation/Analysis of partner’s capital account:

Add: Item J(c) Partner’s share of lines 3, 4, and 7, Form 1065, Schedule M-2 from K-1’s (2001-2003)
Add: Item N – Capital contributed and current year increase from 2004 K-1

+____

Subtract: Item J(d) Withdrawals and distributions from 2001-2003 Schedule K-1’s
Subtract: Item N – Withdrawals and distributions from 2004 K-1
Subtract: Line 18C – Nondeductible expenses from 2004 K-1
Subtract: Line 21- Nondeductible expenses from 2001-2003 K-1’s

-____

Adjusted Basis (enter on Schedule D, column e for a sale of units)

$____

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