City Investing Company Liquidating Trust Fed. I.D. #13-6859211 March 31, 2006
 

2006 UNITED STATES FEDERAL INCOME TAX INFORMATION

This letter provides information relating to the amount and character of the income, gain, loss, deductions and basis adjustment ("Tax Items") of the City Investing Company Liquidating Trust ("Trust") for 2006. You should use this information in 2007 when preparing your 2006 United States Federal income tax return.

If you (i) acquired Trust Units ("Units") upon liquidation of City Investing Company, (ii) reported long-term capital gain or loss upon the liquidation, and (iii) did not dispose of any Units in 2006, you can calculate on the Schedule your share of the Trust Tax Items by multiplying the Amount per Unit [Column IA] of each Tax Item by the Number of Units you held [Column IB] and entering the product under the Taxable Amount [Column IC].

If you (i) disposed of Units in 2006, or (ii) acquired your Units other than upon the liquidation of City Investing Company, or (iii) did not report long-term capital gain or loss upon the liquidation, you will probably have different income tax consequences that cannot readily be calculated by the Trust. For administrative convenience, you may calculate your share of the Trust Tax Items by (i) multiplying the Amount per Unit [Column A] of each Tax Item by the Number of Units you held [Column B] on the first day of each month applicable to your holding period, (ii) entering the product under the Taxable Amount [Column C] and (iii) entering the sum of the amounts in Columns IIC through IVC, if any, in Column V.

Individual taxpayers may report on Form 1040 the amounts of Tax Items computed for United States Federal income tax purposes as follows:
    
Tax Item 1c.Interest Income--line 1, Schedule B
Tax Item 2.Dividend Income--line 5, Schedule B
Tax Item 3.Capital Gain/(Loss)
 3a.   Net Short-Term Capital Gain/(Loss)--line 5, Schedule D, Column (f)
 3b.   Net Long-Term Capital Gain/(Loss)--line 12, Schedule D, Column (f)
Tax Item 4.Gain on Sale of Real Estate -- With Installment Sale Method
 4a.   Payments Received During Year -- line 21, Form 6252
 4b.   Installment sale income -- Qualified 5-Year Gain -- line 24, Form 6252
Tax Item 5.Miscellaneous Income--line 21
Tax Item 6.Trust Expenses--line 22, Schedule A, (if you itemize deductions)
Tax Item 7.Trust Distribution--not includable in taxable income, unless it exceeds basis
Tax Item 8.Adjustment to Basis--With Installment Sale Method--for information purposes
Tax Item 9.Adjustment to Basis--Without Installment Sale Method--for information purposes

If you have an adjusted basis after all Adjustments to Basis calculated on the United States Federal Income Tax Information letters for the period you owned the units, you will realize a taxable loss.

THIS LETTER IS NOT INTENDED TO PROVIDE INCOME TAX ADVICE RELATING TO THE ACQUISITION, HOLDING AND DISPOSITION OF UNITS. YOU ARE STRONGLY ENCOURAGED TO DISCUSS THE INCOME TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF UNITS WITH YOUR TAX ADVISOR.

For all information about Unit holdings:

Units held in street name, please communicate with your bank or broker.

Registered Unit Holders, please communicate with Mellon Investor Services, transfer agent for City Investing Company Liquidating Trust, at:

 
    telephone:           1-800-839-2608
    write to:            Mellon Investor Services, 480 Washington Blvd., Jersey City, NJ 07310
    web site:            http://www.melloninvestor.com

For financial (10-K, 8-K, and 10-Q) and tax information, please go to the Trust's web site: 

                         http://www.cnvlz.com

 

 

 

 
CITY INVESTING COMPANY LIQUIDATING TRUST SCHEDULE OF 2006 UNITED STATES FEDERAL TAX ITEMS

 

  I
 
  Total if held from
  January 1 through
  March 31
 
  A x B = C
 
  Amount        
  per     No. of     Taxable  
  Unit x Units = Amount #
TAX ITEM: *  
1. Interest Income:          
  a) U.S. Gov't Obligations 0.002155 x   =  
  b) All Other 0.000981 x   =  
  c) Total Interest Income (1a+1b) 0.003136 x   =  
 
2. Dividend Income: 0.000036 x   =  
 
3. Capital Gain/(Loss):          
  a) Net Short-Term Capital Gain/(Loss) 0.000006 x   =  
  b) Net Long-Term Capital Gain/(Loss) (0.000436) x   =  
 
4. Gain on Sale of Real Estate - With Installment Sale Method          
  a) Payments Received During Year 0.018897 x   =  
  b) Installment Sale Income   [Qualified 5-Year Gain] 0.004705 x   =  
 
5. Miscellaneous Income: 0.000010 x   =  
 
6. Trust Expenses: 0.011889 x   =  
 
7. Trust Distribution: 0.116000 x   =  
 
8. Adjustment to Basis - With Installment Sale Method          
  Tax Items (1c+2+3a+3b+4b+5-6-7) (0.120432) x   =  
 
9. Adjustment to Basis - Without Installment Sale Method          
  Tax Items (1c+2+3a+3b+5-6-7) (0.125137) x   =  

 

  II
 
   
   
  January
 
  A x B = C
 
  Amount        
  per     No. of     Taxable  
  Unit x Units = Amount o
TAX ITEM: *  
1. Interest Income:          
  a) U.S. Gov't Obligations 0.001422 x   =  
  b) All Other 0.000961 x   =  
  c) Total Interest Income (1a+1b) 0.002383 x   =  
 
2. Dividend Income: 0.000021 x   =  
 
3. Capital Gain/(Loss):          
  a) Net Short-Term Capital Gain/(Loss) 0.000000 x   =  
  b) Net Long-Term Capital Gain/(Loss) (0.000385) x   =  
 
4. Gain on Sale of Real Estate - With Installment Sale Method          
  a) Payments Received During Year 0.018897 x   =  
  b) Installment Sale Income   [Qualified 5-Year Gain] 0.004705 x   =  
 
5. Miscellaneous Income: 0.000000 x   =  
 
6. Trust Expenses: 0.001215 x   =  
 
7. Trust Distribution: 0.000000 x   =  
 
8. Adjustment to Basis - With Installment Sale Method          
  Tax Items (1c+2+3a+3b+4b+5-6-7) 0.005509 x   =  
 
9. Adjustment to Basis - Without Installment Sale Method          
  Tax Items (1c+2+3a+3b+5-6-7) 0.000804 x   =  

 

  III
 
   
   
  February
 
  A x B = C
 
  Amount        
  per     No. of     Taxable  
  Unit x Units = Amount o
TAX ITEM: *  
1. Interest Income:          
  a) U.S. Gov't Obligations 0.000070 x   =  
  b) All Other 0.000000 x   =  
  c) Total Interest Income (1a+1b) 0.000070 x   =  
 
2. Dividend Income: 0.000014 x   =  
 
3. Capital Gain/(Loss):          
  a) Net Short-Term Capital Gain/(Loss) 0.000000 x   =  
  b) Net Long-Term Capital Gain/(Loss) 0.000000 x   =  
 
4. Gain on Sale of Real Estate - With Installment Sale Method          
  a) Payments Received During Year 0.000000 x   =  
  b) Installment Sale Income   [Qualified 5-Year Gain] 0.000000 x   =  
 
5. Miscellaneous Income: 0.000000 x   =  
 
6. Trust Expenses: 0.000533 x   =  
 
7. Trust Distribution: 0.000000 x   =  
 
8. Adjustment to Basis - With Installment Sale Method          
  Tax Items (1c+2+3a+3b+4b+5-6-7) (0.000449) x   =  
 
9. Adjustment to Basis - Without Installment Sale Method          
  Tax Items (1c+2+3a+3b+5-6-7) (0.000449) x   =  

 

  IV
 
   
   
  March
 
  A x B = C
 
  Amount        
  per     No. of     Taxable  
  Unit x Units = Amount o
TAX ITEM: *  
1. Interest Income:          
  a) U.S. Gov't Obligations 0.000663 x   =  
  b) All Other 0.000020 x   =  
  c) Total Interest Income (1a+1b) 0.000683 x   =  
 
2. Dividend Income: 0.000001 x   =  
 
3. Capital Gain/(Loss):          
  a) Net Short-Term Capital Gain/(Loss) 0.000006 x   =  
  b) Net Long-Term Capital Gain/(Loss) (0.000051) x   =  
 
4. Gain on Sale of Real Estate - With Installment Sale Method          
  a) Payments Received During Year 0.000000 x   =  
  b) Installment Sale Income   [Qualified 5-Year Gain] 0.000000 x   =  
 
5. Miscellaneous Income: 0.000010 x   =  
 
6. Trust Expenses: 0.010141 x   =  
 
7. Trust Distribution: 0.116000 x   =  
 
8. Adjustment to Basis - With Installment Sale Method          
  Tax Items (1c+2+3a+3b+4b+5-6-7) (0.125492) x   =  
 
9. Adjustment to Basis - Without Installment Sale Method          
  Tax Items (1c+2+3a+3b+5-6-7) (0.125492) x   =  

 

  V
 
  Total if held on some,
  but not all,
  first days of each month
 
  IIC + IIIC + IVC + VC + VIC +
  VIIC + VIIIC + IXC +
  XC + XIC + XIIC + XIIIC
  Taxable Amount !
TAX ITEM: *  
1. Interest Income:  
  a) U.S. Gov't Obligations  
  b) All Other  
  c) Total Interest Income (1a+1b)  
 
2. Dividend Income:  
 
3. Capital Gain/(Loss):  
  a) Net Short-Term Capital Gain/(Loss)  
  b) Net Long-Term Capital Gain/(Loss)  
 
4. Gain on Sale of Real Estate - With Installment Sale Method  
  a) Payments Received During Year  
  b) Installment Sale Income   [Qualified 5-Year Gain]  
 
5. Miscellaneous Income:  
 
6. Trust Expenses:  
 
7. Trust Distribution:  
 
8. Adjustment to Basis - With Installment Sale Method  
  Tax Items (1c+2+3a+3b+4b+5-6-7)  
 
9. Adjustment to Basis - Without Installment Sale Method  
  Tax Items (1c+2+3a+3b+5-6-7)  

 

*   The Trust Tax Items for 2006 have been calculated in accordance with the letter on the front side of this page, and our letter of November 26, 1985 (reproduced on Page 14) providing certain tax information, which are integral parts hereof and which you should review with your tax advisor before reporting your share of the Trust Tax Items on your 2006 United States Federal income tax return.
#   Taxable Amount [Column IC] is equal to the Amount per Unit [Column IA] multiplied by No. of Units you held [Column IB] continuously from January 1 through March 31, 2006.
o   Taxable Amount [Column C] is equal to the Amount per Unit [Column A] multiplied by No. of Units you held [Column B] on the first day of each month.
!   Taxable Amount [Column V] is equal to the sum of the Taxable Amounts in Columns IIC through IV for each month that you held Trust Units on the first day.

 

 

 
 

 

City Investing Company Liquidating Trust

Re: Tax Information

    This letter is to advise you of the tax return information to be provided to you annually as a holder of units ("Units") in the City Investing Company Liquidating Trust ("Trust"). The Trust, being a "grantor" trust, will be disregarded for Federal income tax purposes and you will be treated as having a direct interest in an allocable portion of each asset and liability of the Trust. Consequently, an allocable portion of all items of Trust income, deductions and credits ("Tax Items") must be reported by you on your income tax return. Your taxable year and accounting method will determine the income tax treatment of your allocable portion of Tax Items. As soon as practicable after the end of each year, but no later than April 15 of the following year, you will be provided with a schedule listing your allocable share of Tax Items for the year, which will be determined by the number of Units you own in relation to the total number of outstanding Units. This will enable you to file your federal, state and local income tax returns. The types of Tax Items which will be required to be reported by you on your income tax return may include, but are not limited to interest income, original issue discount income, short-term and long-term capital gains and losses, dividend income, market discount income, depreciation, state, local and foreign taxes and deductible expenses incurred by the Trust.

    For purposes of determining gain or loss from the sale or other disposition of your undivided interest in assets held by the Trust, your holding period and adjusted basis for your undivided interest in each of the assets held by the Trust will be determined by your date of acquisition and the price you paid for your Units. If you received your Units upon the liquidation of City Investing Company, you will be treated as acquiring your undivided interest in the net assets of the Trust at a price of $3.1875 per Unit and your holding period for your undivided interest in the assets held by the Trust will have begun on September 26, 1985. If you sell your Units, you will be deemed to sell an undivided interest in each asset of the Trust for an allocable portion of the sales price for the Units. For example, if you sell your Units, you may be required to recognize ordinary income with respect to your interest in market discount obligations held by the Trust. For administrative convenience, gains and losses from the sale or other disposition by the Trust of assets held by the Trust, including the collection of installment notes receivable, will be reported to you by the Trust as if all Unit holders obtained their Units, and, consequently, their undivided interests in the assets held by the Trust, upon the liquidation of City Investing Company. Subsequent Unit holders may have different income tax consequences, but these tax consequences cannot readily be calculated. For example, with respect to the collection of installment notes receivable, the Trust will report to you the portion of amounts received which are reportable as market discount, which will be taxed as ordinary income, on the basis of an acquisition date of September 25, 1985 and a price per Unit of $3.1875. For this purpose, it will be assumed that the installment notes receivable will not be eligible for installment sales reporting tax treatment.

    For administrative convenience, certain special rules will apply to the determination of the effective date of transfers of Units. A transfer will not be considered effective until the first day of the month following the month in which the transfer occurs (or, if earlier, the first day following the date on which the Trust disposes of any asset the basis of which exceeds 5% of the bases of all the assets held by the Trust on September 25, 1985). Record holders of Units on the first day of a month or the day after which such a disposition of assets takes place will be entitled to receive all distributions made on or after such date and before any subsequent effective date of transfer and will be treated for tax purposes as the owner of the underlying assets of the Trust for such period. In accordance with these rules, the Trust will determine for periods ending at the end of each month (and for periods ending on the day the Trust disposes of any asset the basis of which exceeds 5% of the bases of all assets held by the Trust on September 25, 1985) the Tax Items to be included on the schedule to be provided to you annually. For administrative convenience, Tax Items will be determined using the cash method of tax accounting.

    This letter is not intended to provide income tax advice relating to the holding of Units. As such, you are strongly encouraged to discuss the income tax consequences of an investment in Units with your tax advisor.

November 26, 1985