SECURITIES AND EXCHANGE COMMISSION


Washington, DC  20549





FORM 10-K




(Mark One)


x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For fiscal year ended December 31, 2010





OR





 ̈
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ________ to ________.





0-17412


(Commission File Number)





Secured Income L.P.


(Exact Name of Registrant as Specified in its Governing Instruments)





Delaware
06-1185846(State or Other Jurisdiction of Organization)
(I.R.S. Employer Identification No.)





Wilder Richman Resources Corporation340 Pemberwick RoadGreenwich, Connecticut
06831(Address of Principal Executive Offices)
(Zip Code)





Registrant's Telephone Number, Including Area Code:  (203) 869-0900





Securities registered pursuant to Section 12(b) of the Act:  None.





Securities registered pursuant to Section 12(g) of the Act:





Units of Limited Partnership Interest


(Title of Class)





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   ̈   No  x





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  Yes   ̈   No  x





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  x   No   ̈





Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes   ̈   No   ̈





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in a definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x





Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large Accelerated Filer  ̈    Accelerated Filer   ̈    Non-Accelerated Filer  ̈    Smaller Reporting Company  x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   ̈    No  x





Registrant has no voting common equity.  There is no established public trading market for Registrant’s Units.  Accordingly, accurate information as to the market value of a Unit at any given date is not available.  As of March 31, 2011, there are 984,369 units outstanding.  The aggregate sales price for such units was $19,687,309.





Documents incorporated by reference:


The Prospectus of the Registrant, dated March 5, 1987, as supplemented and filed pursuant to Rule 424(b) and (c) under the Securities Act of 1933, is incorporated by reference into Parts I, II and III of this Annual Report on Form 10-K.










PART I





Item 1.  Business.





General Development of Business and Narrative Description of Business





Registrant is a limited partnership which was formed under the Delaware Revised Uniform Limited Partnership Act on October 10, 1986.  The general partners of Registrant (the "General Partners") are Wilder Richman Resources Corporation (“WRRC”), a Delaware corporation, Real Estate Equity Partners L.P., a Delaware limited partnership, and WRC-87A Corporation (“WRC-87A”), a Delaware corporation.





Registrant was organized to invest in multi-family residential housing complexes (the "Complexes") by acquiring approximately 99% of the limited partner interest (the "Operating Partnership Interest") in limited partnerships that own and operate such Complexes (the "Operating Partnerships").  Registrant invested in Carrollton X Associates Limited Partnership ("Carrollton"), which owns Fieldpointe Apartments (“Fieldpointe”), and Columbia Westmont Associates, L.P., formerly Columbia Associates ("Columbia"), which owned The Westmont.  Columbia sold The Westmont in July 2006.  WRC-87A is a special limited partner of each Operating Partnership and has certain rights in connection therewith.  Pursuant to Rule 12b-23 of the Securities and Exchange Commission’s General Rules and Regulations promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) the description of Registrant’s business set forth under the heading "Investment Objectives and Policies" at pages 20 through 30 of Registrant’s prospectus, dated March 5, 1987 (as supplemented on October 2, 1987, December 15, 1987 and March 29, 1988, the “Prospectus”), is incorporated herein by reference.





Pursuant to the Prospectus, Registrant offered up to $50 million of units of limited partnership interest in Registrant (the "Units") at an offering price of $20 per Unit. The Units were registered under the Securities Act of 1933 pursuant to a Registration Statement on Form S-11 (Registration No. 33-9602).





Registrant terminated the offering of Units (the "Offering") on February 29, 1988 upon raising sufficient capital from the sale of Units to fund the acquisition of the two properties specified for investment by Registrant as noted above.  The Offering raised $19,687,380 from the sale of 984,369 Units.  After payment of $1,378,117 of selling commissions and $1,378,116 of organization and offering expenses and acquisition fees, the net proceeds available for investment were $16,931,147.  Of such net proceeds, $16,734,273 was allocated to the acquisition of the Operating Partnership Interests which included investments in guaranteed investment contracts.  The remaining net proceeds of $196,874 were designated as working capital to be used for operating expenses of Registrant.





Financial Information About Industry Segments





Registrant is currently engaged solely in the business of owning a limited partner interest in Carrollton.  A presentation of information regarding industry segments is not applicable and would not be material to an understanding of Registrant’s business taken as a whole.  See Item 7 below for a summary of Registrant’s operations.





Competition





Information regarding competition, general risks, tax risks and partnership risks is set forth under the heading "Risk Factors" at pages 37 through 48 of the Prospectus, which is incorporated herein by reference.





Compliance with Environmental Protection Provisions





Registrant is not aware of any non-compliance by Carrollton with respect to federal, state and local provisions regulating the discharge of material into the environment or otherwise relating to the pro­tection of the environment, and is not aware of any condition that would have a material effect on the capital expenditures or competitive position of Registrant.





Employees of Registrant





Registrant employs no personnel and incurs no payroll costs.  An affiliate of WRRC employs individuals who perform accounting, secretarial, transfer and other services on behalf of Registrant as are necessary in the ordinary course of business.  Such individuals also perform similar services for other affiliates of WRRC.




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Item 1A.  Risk Factors.





Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.





Item 1B.  Unresolved Staff Comments.





Not applicable.





Item 2.  Properties.





Fieldpointe, which is owned by Carrollton, is located in Frederick, Maryland and is comprised of 252 apartment units totaling approximately 235,000 square feet with approximately 500 parking spaces.  On-site amenities include a clubhouse building with locker room and on-site management office, a swimming pool and two tennis courts.  The apartments feature numerous amenities, including dishwashers, disposals and fireplaces.


Registrant acquired its Operating Partnership Interest in Carrollton by making a capital contribution of $3,121,995.  Of this amount, $1,373,039 was invested in guaranteed investment contracts and $1,748,956 was contributed upon Registrant's acquisition of the Operating Partnership Interest, including the amount due upon the achievement of sustaining rental revenue.





The mortgage of Carrollton was financed from the sale of tax-exempt bonds pursuant to the terms of Section 103(b)(4)(a) of the Internal Revenue Code.  The mortgage in the original amount of $10,494,100, bearing fixed 6.09% interest and maturing in February 2028, is insured by the Federal Housing Administration, (“FHA”), an organizational unit within the United States Department of Housing and Urban Development ("HUD") under Section 221(d)(4) of the National Housing Act of 1934, as amended.  Under the terms of the financing, 80% of the apartment units are permitted market rate rents and 20% of the apartment units are to be rented to people earning no more than the low or moderate income levels within the meaning of Section 103(b)(4)(a) of the Internal Revenue Code.  Fieldpointe’s occupancy rate was approximately 98% as of December 31, 2010.





As of December 31, 2010, the market rental rates of Fieldpointe were approximately as follows:





Monthly Rental Rates:One-Bedroom
$845 - $860Two-Bedroom
$910 - $1,010Three-Bedroom
$1,125 - $1,195





The low and moderate income rental rates as of December 31, 2010 fall within the ranges noted above.





The Westmont, which was owned by Columbia, was sold in July 2006.  Registrant acquired its Operating Partnership Interest in Columbia by making a capital contribution of $12,571,634.  Of this amount, $6,651,323 was invested in guaranteed investment contracts (which had a value of $5,610,679, including net accrued interest of $18,918, at the time of the acquisition as a result of principal amortization from the dates of purchase of such guaranteed investment contracts to the closing of the Columbia acquisition), $5,921,104 was contributed upon Registrant’s acquisition of the Operating Partnership Interest in Columbia and $1,039,851 was contributed to Columbia upon the achievement of sustaining rental revenue.





Further information regarding the Complexes and Registrant’s interest therein is set forth under the heading Specified Investments at pages 30 through 36 of Registrant’s prospectus dated March 5, 1987, and in the supplements thereto dated October 2, 1987 and March 29, 1988.





Item 3.  Legal Proceedings.





None.





Item 4.  [Removed and Reserved.]





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PART II





Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.





Market





There is no developed public market for the purchase and sale of Units and Registrant does not anticipate that such a market will develop.





Holders




As of December 31, 2010, there were approximately 475 record holders of Units (the “Limited Partners”) holding an aggregate of 984,369 Units.


Distributions





The Agreement of Limited Partnership of Registrant (the "Partnership Agreement") provides that the Limited Partners receive an 8% annualized return on their outstanding Adjusted Capital Contribution (the “Limited Partners’ Adjusted Capital Contribution”), reduced by all distributions of Sale or Refinancing Proceeds.  In connection with the sale of The Westmont in July 2006, the Limited Partners received distributions totaling $42.10 per Unit, as compared with an initial investment of $20 per Unit, in addition to receiving an approximately 8% annualized return on their investment from inception through August 4, 2006, the date on which the full amount of the Limited Partners’ Adjusted Capital Contribution was paid.  The last three payments of the 8% return through August 4, 2006 were paid in May 2006, July 2006 and April 2007 to Unit holders of record as of March 31, 2006, June 30, 2006 and December 31, 2006, respectively.





Since the return of the Limited Partners’ Adjusted Capital Contribution in full, Registrant no longer makes regular quarterly cash distributions, but made distributions in the amount of approximately $0.25 per Unit on March 31, 2010 to Unit holders of record as of December 31, 2009 and $0.50 per Unit on July 21, 2009 to Unit holders of record as of June 30, 2009 and on July 25, 2008 to Unit holders of record as of June 30, 2008.  Registrant intends to continue to make periodic distributions of Cash Available for Distribution (as defined in the Partnership Agreement) and anticipates that an additional distribution may be made in the second quarter of 2011.  The ability to make such distribution, and the amount of such distribution, if any, will depend on Fieldpointe’s cash flow and reserve levels, among other things.  Accordingly, there can be no certainty as to the payment of future distributions or the amount and timing thereof.  The distributions to the Limited Partners reflected in the accompanying consolidated financial statements as of and for the years ended December 31, 2010 and 2009 include withholding taxes paid by Registrant to the State of Maryland on behalf of the Limited Partners of approximately $.05 and $.04 per Unit, respectively.





Recent Sales of Unregistered Securities





None.





Item 6.  Selected Financial Data.





Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.





Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.





Liquidity and Capital Resources





Secured Income L.P. (the “Registrant”) owns a 98.9 % interest in Carrollton X Associates Limited Partnership (“Carrollton”). Fieldpointe, the operating complex owned by Carrollton, remains on the market for sale as the Carrollton general partners continue to receive inquiries; however, given the current real estate market, the Carrollton general partners believe the likelihood that an acceptable offer might be received in the near term is not probable.  The Carrollton general partners cannot accurately predict the direction of the real estate market, and there can be no assurance that an acceptable offer will be received or that a sale will be consummated.  Notwithstanding the foregoing, if a sale of Fieldpointe were to occur, Registrant intends to distribute the net proceeds received to its partners, less a reasonable reserve, in accordance with the terms and conditions of Registrant’s Partnership Agreement.  At such time, Registrant intends to dissolve.




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Registrant made a distribution on March 31, 2010 in the amount of approximately $0.25 per Unit to Unit holders of record (the “Limited Partners”) as of December 31, 2009.  Registrant anticipates that an additional distribution may be made in the second quarter of 2011.  The ability to make such distribution, and the amount of such distribution, if any, will depend on Fieldpointe’s cash flow and reserve levels, among other things.  Accordingly, there can be no certainty as to the payment of future distributions or the amount and timing thereof.  The distributions reflected in the accompanying consolidated financial statements as of and for the year ended December 31, 2010 include withholding taxes paid by Registrant to the State of Maryland on behalf of the Limited Partners of approximately $.05 per Unit, distributions to Registrant’s general partners (the “General Partners”) and amounts distributed by Carrollton to its general partners.





Registrant's current primary source of funds is the rents generated by Fieldpointe.  Registrant's investment is considered highly illiquid.





In the event a sale of Fieldpointe does not take place, Registrant is not expected to have access to additional sources of financing.  Accordingly, if unforeseen contingencies arise that cause Fieldpointe to require capital in addition to that contributed by Registrant and any equity of Carrollton’s general partners, potential sources from which such capital needs will be able to be satisfied (other than reserves) would be additional equity contributions or voluntary loans of Carrollton’s general partners (which general partners are not required to fund such amounts) or other reserves, if any, which could adversely impact distributions from Carrollton to Registrant of operating cash flow and any sale or refinancing proceeds.





Registrant formerly held an interest in Columbia Westmont Associates, L.P. (“Columbia”), which sold its underlying property in 2006.  After an appeal, Columbia received a real estate tax refund for a prior year in the amount of approximately $998,000, which amount is net of professional fees incurred in connection with the appeal.  Registrant and the general partners of Columbia are currently undergoing discussions and seeking guidance in an effort to determine how the funds received should be characterized and applied under the terms of Columbia’s partnership agreement, and the amount, if any, that should be paid to Registrant and the other partners of Columbia.





Although Registrant generated cash from operations during the year ended December 31, 2010, cash and cash equivalents and investment in bond decreased, in the aggregate, by approximately $47,000 during the year, primarily as a result of the distributions to partners described above.  Such decrease includes an unrealized gain on investment in bond of approximately $3,000.  Property and equipment decreased as a result of depreciation expense of $416,044, partially offset by capital improvements of $80,861.  Mortgage payable decreased as a result of principal payments on Carrollton’s mortgage.





Results of Operations





The discussion below refers primarily to the operations of Carrollton and not to that of Registrant as a whole.





Year Ended December 31, 2010





During the year ended December 31, 2010, Carrollton’s operations resulted in net income of approximately $347,000, which includes financial expenses and depreciation and amortization of approximately $524,000 and approximately $431,000, respectively, but does not include capitalized capital improvements of approximately $81,000.  Accordingly, Carrollton generated income from operating activities prior to financial expenses and depreciation and amortization of approximately $1,302,000.  Mortgage principal payments during 2010 for Carrollton were approximately $249,000.  After considering the mandatory mortgage principal payments, required deposits to mortgage escrows and capitalized capital improvements, among other things, Carrollton generated cash flow of approximately $464,000 during the year ended December 31, 2010.  There can be no assurance that the level of cash flow generated by Carrollton during the year ended December 31, 2010 will continue in future periods.





Registrant’s results of operations as a whole for the year ended December 31, 2010 improved as compared to the year ended December 31, 2009 primarily as a result of higher average occupancy of Fieldpointe.





As of December 31, 2010, the occupancy of Fieldpointe was approximately 98%.  In the event a sale of Fieldpointe does not take place, the future operating results of Fieldpointe will be extremely dependent on market conditions and therefore may be subject to significant volatility.




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Year Ended December 31, 2009





During the year ended December 31, 2009, Carrollton’s operations resulted in net income of approximately $211,000, which includes financial expenses and depreciation and amortization of approximately $538,000 and approximately $418,000, respectively, but does not include capitalized capital improvements of approximately $132,000.  Accordingly, Carrollton generated income from operating activities prior to financial expenses and depreciation and amortization of approximately $1,167,000.  Mortgage principal payments during 2009 for Carrollton were approximately $235,000.  After considering the mandatory mortgage principal payments, required deposits to mortgage escrows and capitalized capital improvements, among other things, Carrollton generated cash flow of approximately $240,000 during the year ended December 31, 2009.





In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360; Subtopic 10, the property and equipment of Carrollton was classified as held for sale in Registrant’s consolidated balance sheet as of December 31, 2007.  As a result of a change in circumstances, such classification was changed to held and used in 2008.  Accordingly, the depreciation expense recorded for the year ended December 31, 2008 represents three years of expense because no depreciation was recorded in 2007 and 2006.  After taking into account the impact of such depreciation adjustment, Registrant’s results of operations for the year ended December 31, 2009 reflect a decline as compared to the year ended December 31, 2008.  Such decline is due primarily to a decrease in the average occupancy of Fieldpointe for 2009 as compared to 2008.  As of December 31, 2009, the occupancy of Fieldpointe was approximately 90%.





Year Ended December 31, 2008





During the year ended December 31, 2008, Carrollton’s operations resulted in a net loss of approximately $395,000, which includes financial expenses and depreciation and amortization of approximately $552,000 and approximately $1,187,000, respectively, but does not include capitalized capital improvements of approximately $131,000.  As noted above, the depreciation expense recorded for the year ended December 31, 2008 represents three years of expense because no depreciation was recorded in 2007 and 2006 as a result of the property and equipment of Carrollton being classified as held for sale.  Accordingly, Carrollton generated income from operating activities prior to financial expenses and depreciation and amortization of approximately $1,344,000.  Mortgage principal payments during 2008 for Carrollton were approximately $221,000.  After considering the mandatory mortgage principal payments, required deposits to mortgage escrows and capitalized capital improvements, among other things, Carrollton generated cash flow of approximately $418,000 during the year ended December 31, 2008.  As of December 31, 2008, the occupancy of Fieldpointe was approximately 92%.





Inflation





Inflation may have a material adverse impact on Registrant's operations.  A situation could arise in which rents on the 20% of Carrollton’s apartment units set aside as affordable, which rents are calculated as a percentage of median family income, are reduced as a result of falling median family incomes.  At the same time, Carrollton’s operating expenses, such as heating oil and real estate taxes, could increase due to inflation.  Such situation could lead to lower rental income, higher operating expenses, and lower income from continuing operations.





Critical Accounting Policies and Estimates





The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires Registrant to make certain estimates and assumptions.  A summary of significant accounting policies is provided in Note 1 to the accompanying consolidated financial statements.  The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s financial condition and results of operations.  Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the accompanying consolidated financial statements.





Registrant records its real estate assets at cost less accumulated depreciation and, if there are indications that impairment exists, adjusts the carrying value of those assets in accordance with ASC Topic 360; Subtopic 10.  In accordance with ASC Topic 360; Subtopic 10, long-lived assets, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.  Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.  For long-lived assets, Registrant recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.  No such adjustment for impairment losses is required as of December 31, 2010.




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Recent Accounting Pronouncements





In January 2010, the FASB issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), amending ASC Topic 820 to increase disclosure requirements regarding recurring and nonrecurring fair value measurements.  Registrant adopted ASU 2010-06 for the year ended December 31, 2010, except for the disclosures about activity in Level 3 fair value measurements which will be effective for Registrant’s fiscal year beginning January 1, 2011.  The adoption of ASC Topic 820 did not have a material impact on Registrant’s consolidated financial statements and is not expected to have a material impact on Registrant’s consolidated financial statements once fully implemented.





Forward-Looking Information





As a cautionary note, with the exception of historical facts, the matters discussed in this annual report on Form 10-K are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).  Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition.  Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements.  Registrant may also provide written forward-looking statements in other materials released to the public.  Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act.  Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.  Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.





Off - Balance Sheet Arrangements





Other than the operating leases between Fieldpointe and its tenants, Registrant does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Registrant’s financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.


Contractual Obligations





Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.





Item 7A.  Quantitative and Qualitative Disclosures about Market Risk.





The market value of Registrant’s investment in bond is subject to fluctuation based upon changes in interest rates relative to the investment’s maturity date and the associated bond rating.  Since Registrant’s investment in bond is callable in 2013, the value of such investment may be adversely impacted in an environment of rising interest rates in the event Registrant decides to liquidate the investment prior to its call date.  Although Registrant may utilize the investment to pay for its operating expenses, it otherwise intends to hold such investment to its call date.  Therefore, Registrant does not anticipate any material adverse impact in connection with such investment.





Item 8.  Financial Statements and Supplementary Data.





Set forth in the consolidated financial statements listed on page F-2 is the financial information required in response to Item 8.  Such consolidated financial statements and schedules appear on pages F-1 to F-14 and are incorporated herein by reference.





Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.





None.




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Item 9A. Controls and Procedures.





Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed by Registrant in reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms.  Registrant periodically reviews the design and effectiveness of its disclosure controls and procedures, including compliance with various laws and regulations that apply to its operations.  Registrant makes modifications to improve the design and effectiveness of its disclosure controls and procedures, and may take other corrective action, if its reviews identify a need for such modifications or actions.  In designing and evaluating the disclosure controls and procedures, Registrant recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.





Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of WRRC, one of Registrant’s general partners, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the year ended December 31, 2010.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of WRRC concluded that Registrant’s disclosure controls and procedures were effective as of December 31, 2010.





Management’s Annual Report on Internal Control over Financial Reporting





Registrant is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  Under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer of WRRC, Registrant conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on its evaluation, management has concluded that Registrant’s internal control over financial reporting was effective as of December 31, 2010.





This Annual Report does not include an attestation report of Registrant’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by Registrant’s independent registered public accounting firm pursuant to rules of the SEC that permit Registrant to provide only management’s report in this Annual Report on Form 10-K.





Changes in Internal Control Over Financial Reporting





There were no changes in Registrant’s internal control over financial reporting during the three months ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.





Item 9B. Other Information.





None.


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PART III





Item 10.  Directors, Executive Officers and Corporate Governance.





Registrant has no directors or executive officers.





The General Partners of Registrant are WRRC, Real Estate Equity Partners L.P., a Delaware limited partnership and an affiliate of Apartment Investment and Management Company (“AIMCO”) (the "AIMCO General Partner"), and WRC-87A.  WRC-87A is currently one-half owned by Real Estate Equity Partners Inc., the corporate general partner of the AIMCO General Partner, and one-half owned by the shareholders of WRRC.





WRRC





The directors and certain officers of WRRC are set forth below:





Name
Age
OfficeRichard Paul Richman
63
President and DirectorRobert H. Wilder, Jr.
65
Executive Vice President and DirectorJames Hussey
50
TreasurerCharles L. Krafnick
49
Assistant Treasurer





Richard Paul Richman has served as President and Director of WRRC since its inception in 1986.  Mr. Richman graduated from the Columbia University Law School with a Juris Doctor degree, the Columbia University Graduate School of Business with a Master of Business Administration degree and Syracuse University with a Bachelor of Arts degree in Political Science.  Mr. Richman has over twenty years of extensive experience in both the development and management of residential properties.  From 1973 until 1979, Mr. Richman practiced corporate law in New York City with the law firm of Greenbaum, Wolff & Ernst and then as a partner of Shipley, Richman & Nierenberg.  For over six years, Mr. Richman acted as a lawyer in connection with the development, syndication and tax issues relating to real estate.  Since 1988, Mr. Richman has been a stockholder of The Richman Group, Inc. (“Richman Group”) and is currently its Chairman.  In recent years, Mr. Richman has devoted full time to the syndication and development of real estate.  Mr. Richman was a vice president and shareholder of Related Housing Companies Incorporated, New York, New York from 1978 until mid 1979 with responsibility for that company's project acquisition and syndication activities.  Mr. Richman has been a member of the National Advisory Board of the Housing and Development Reporter, a bi-weekly publication of the Bureau of National Affairs, Inc., a frequent speaker on real estate syndication, has been a member of the New York State Historic Credit Task Force, the National Leased Housing Association, the Coalition to Preserve the Low-Income Tax Credit and the Minority Developer Assistance Corporation (which was established by the New York State Battery Park Commission).  As a result of these and other professional experiences, Mr. Richman possesses particular knowledge and experience in real estate that strengthen the Board’s collective qualifications, skills and experience.





Robert H. Wilder, Jr. has served as Executive Vice President and Director of WRRC since its inception in 1986.  Mr. Wilder graduated from the University of Michigan with a Bachelor of Arts degree in Economics and from the Columbia University Graduate School of Business with a Master of Business Administration degree.  After graduation in 1968, Mr. Wilder joined James D. Landauer Associates, Inc., a national real estate consulting firm, where his responsibilities included feasibility studies, market analyses, land use studies, portfolio valuations and appraisals of industrial, office, commercial and multi-family properties. From 1973 until mid 1979, Mr. Wilder was executive vice president and shareholder of Related Housing Companies Incorporated, New York, New York, and was responsible for mortgage financing and construction loan placement and the supervision of the development of the company's projects.  Since 1988, Mr. Wilder has been the President and sole shareholder of Wilder Property Companies Inc.  Mr. Wilder is also a licensed real estate broker in New York and Connecticut.  As a result of these and other professional experiences, Mr. Wilder possesses particular knowledge and experience in real estate that strengthen the Board’s collective qualifications, skills and experience.





James Hussey has served as the Chief Financial Officer (Treasurer) of WRRC since January 2009.  Mr. Hussey, the Treasurer of Richman Group, is engaged primarily in the finance operations of Richman Group.  In addition, Mr. Hussey is a Vice President and the Treasurer of Richman Asset Management, Inc. (“RAM”), an affiliate of the WRRC General Partner.  Mr. Hussey is engaged primarily in the partnership management and finance operations of RAM.  Prior to joining RAM, Mr. Hussey, a Certified Public Accountant, was the Chief Financial Officer of WCI Communities Inc. NE Region and Spectrum Communities, LLC.  From 1989 to 1998, Mr. Hussey held various positions with Center Development Corp, a developer of affordable housing in the New York metropolitan area.  Mr. Hussey graduated from SUNY at Albany in 1983 with a Bachelor of Science degree and the Columbia University Graduate School of Business with a Master of Business Administration degree in 1994.




- 9 -





Charles L. Krafnick has served as the Assistant Treasurer of WRRC since April 2004.  Mr. Krafnick, the Assistant Treasurer of Richman Group, has been employed by Richman Group or an affiliate since 1994 and is engaged primarily in the finance operations of Richman Group.  In addition, Mr. Krafnick is the Assistant Treasurer of RAM; Mr. Krafnick's responsibilities in connection with RAM include various finance and partnership management functions.  Mr. Krafnick, a Certified Public Accountant, received a Bachelor of Science degree from Marquette University in 1984.





The AIMCO General Partner





Certain officers of Real Estate Equity Partners Inc. are set forth below.





Name
Age
OfficeTimothy J. Beaudin
52
President, Chief Operating Officer and DirectorErnest M. Freedman
40
Executive Vice President, Chief Financial Officer and Director





Timothy J. Beaudin is President, Chief Operating Officer and a Director of Real Estate Equity Partners Inc.  Mr. Beaudin currently serves as President and Chief Operating Officer of AIMCO.  He joined AIMCO as Chief Development Officer in October 2005 and was appointed Executive Vice President and Chief Property Operating Officer in October 2008.  Prior to joining AIMCO and beginning in 1995, Mr. Beaudin was with Catellus Development Corporation, a San Francisco, California-based real estate investment trust.  During his last five years at Catellus, Mr. Beaudin served as Executive Vice President, with management responsibility for development, construction and asset management.  As a result of these and other professional experiences, Mr. Beaudin possesses particular knowledge and experience in real estate that strengthen the Board’s collective qualifications, skills and experience.





Ernest M. Freedman is Executive Vice President, Chief Financial Officer and a Director of Real Estate Equity Partners Inc. Mr. Freedman was appointed Executive Vice President and Chief Financial Officer of AIMCO in November 2009.  Mr. Freedman joined AIMCO in 2007 as Senior Vice President of Financial Planning and Analysis and has served as Senior Vice President of Finance since February 2009, responsible for financial planning, tax, accounting and related areas.  From 2004 to 2007, Mr. Freedman served as Chief Financial Officer of HEI Hotels and Resorts.  From 2000 to 2004, Mr. Freedman was at GE Real Estate in a number of capacities, including operations controller and finance manager for investments and acquisitions.  From 1993 to 2000, Mr. Freedman was with Ernst & Young, LLP, including one year as a senior manager in the real estate practice.  Mr. Freedman is a certified public accountant.  As a result of these and other professional experiences, Mr. Freedman possesses particular knowledge and experience in real estate that strengthen the Board’s collective qualifications, skills and experience.





WRC-87A





The directors and officers of WRC-87A are as follows:





Name
OfficeTerry Considine
President and DirectorRichard Paul Richman
Executive Vice President, Secretary,   Treasurer and Director





Terry Considine, 63, is President and a Director of WRC-87A.  Mr. Considine has been Chairman of the Board and Chief Executive Officer of AIMCO since July 1994.  Mr. Considine also serves on the board of directors of Intrepid Potash, Inc., a publicly held producer of potash and, until its acquisition in early 2009, Mr. Considine served as Chairman and Chief Executive Officer of American Land Lease, Inc., a publicly held real estate investment trust.  Mr. Considine has over 40 years of experience in real estate and other industries.  Among other real estate ventures, in 1975, Mr. Considine founded and managed the predecessor companies that became AIMCO at its initial public offering in 1994.  As a result of these and other professional experiences, Mr. Considine possesses particular knowledge and experience in real estate that strengthen the Board’s collective qualifications, skills and experience.




- 10 -





Mr. Richman's biography is included above with the description of WRRC’s directors and officers.





Registrant is not aware of any family relationship between any directors and executive officers listed in this Item 10.  Registrant is not aware of the involvement in certain legal proceedings with respect to the directors and executive officers listed in this Item 10.





Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant (the “Audit Committee”). Each of Mr. Richman, Mr. Hussey and Mr. Krafnick meets the qualifications of an audit committee financial expert. Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under the Nasdaq Stock Market independence standards; however Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee.





The Board of Directors of WRRC has adopted a code of ethics for senior financial officers of Registrant, applicable to Registrant's principal executive officer, principal financial officer and comptroller or principal accounting officer, or persons performing similar functions.  Registrant will provide to any person without charge a copy of such code of ethics upon written request to WRRC at 340 Pemberwick Road, Greenwich, Connecticut 06831, Attention: Secretary.





Item 11.  Executive Compensation.





Registrant is not required to pay the officers, directors or partners of the General Partners any direct compensation and no such compensation was paid during the fiscal year ended December 31, 2010 or during the prior two fiscal years.





Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.





a)  As of December 31, 2010, affiliates of MacKenzie Patterson Fuller, Inc. (“MacKenzie”), with the address 1640 School Street, Moraga, CA 94556, own 145,212 Units, representing approximately 14.75% of the outstanding Units of limited partnership interest.  Other than MacKenzie, no person or entity, other than affiliates of the General Partners discussed below, was known by Registrant to be the beneficial owner of more than five percent of the Units.





b)  Security ownership by the General Partners is as follows:





Percentage ofAmount and


OutstandingNature of


GeneralName and Address

Beneficial


Partners'Title of Class

of Beneficial Owner

Ownership


Interest*General

Real Estate Equity

$
3.33



33.3%Partners'

Partners L.P.Interest in

4582 S. Ulster Parkway, Suite 1100Secured Income L.P.

Denver, CO 80237Wilder Richman

$
3.33



33.3%Resources Corporation340 Pemberwick RoadGreenwich, CT 06831WRC-87A Corporation

$
3.34



33.4%340 Pemberwick RoadGreenwich, CT 06831





* General Partners as a class have a 1% interest in all profits, losses and distributions of Registrant.
  - 11 -




As of December 31, 2010, affiliates of WRRC, WRC 87-A and certain of the Carrollton and Columbia Operating General Partners own 250,035 Units, representing approximately 25.40% of the outstanding Units of limited partnership interest as follows:  West Putnam Housing Investors, LLC - 47,211 Units, West Putnam Housing Investors II, LLC - 186,217 Units and West Putnam Housing Investors III, LLC - 16,607 Units.  The address of these entities is 340 Pemberwick Road, Greenwich, CT 06831.





As of December 31, 2010, affiliates of Real Estate Equity Partners L.P. own 228,286 Units, representing approximately 23.19% of the outstanding Units of limited partnership interest as follows:  AIMCO Bethesda Holdings Acquisition, Inc. - 225,786 and Market Ventures, LLC - 2,500.  The address of these entities is 4582 S. Ulster St. Parkway, Suite 1100, Denver, CO 80237.





c)  Registrant knows of no arrangements that may, at a subsequent date, result in a change of control of Registrant.  Article VI of the Partnership Agreement describes the circumstances under which changes in General Partners can occur.





Item 13. Certain Relationships and Related Transactions, and Director Independence.





Transactions with Related Persons





All transactions with related parties having occurred within the past three years are detailed in Note 8 to the audited consolidated financial statements of Registrant included under Item 8 hereto.





The General Partners and their affiliates are entitled to receive certain compensation, fees and reimbursements of expenses.  Registrant incurred $98,437 in connection with investor services payable to an affiliate of certain General Partners for the years ended December 31, 2010 and 2009 and has continued to incur such expenses in 2011.  Information regarding such compensation is set forth under the heading "Compensation And Fees To General Partners And Affiliates" at pages 13 through 19 of the Prospectus, which is incorporated herein by reference.





The financial interests in Registrant of the General Partners and Special Limited Partner are set forth under the heading "Profits, Losses and Distributions" at pages 64 through 67 of the Prospectus, which is incorporated herein by reference.





Transactions with Affiliates of Management





Richman Property Services, Inc. ("RPS"), formerly WRMC, Inc. (“WRMC”), an affiliate of certain General Partners, was the managing agent of Fieldpointe in 2010 and 2009.  In connection with these services, RPS earned management and reporting fees of $120,843 and $114,616 in 2010 and 2009, respectively.  RPS has continued to earn management and reporting fees in 2011 as described in Note 8 to the audited consolidated financial statements of Registrant included under Item 8 hereto.





Indebtedness of Management





No officer or director of the General Partners or any affiliate of the foregoing was indebted to Registrant at any time during the fiscal years ended December 31, 2010 and 2009.





Review, Approval or Ratification of Transactions with Related Parties





Pursuant to the terms of the Partnership Agreement, Registrant has specific rights and limitations in conducting business with the General Partners and affiliates.  To date, Registrant has followed such provisions of the Partnership Agreement.  Registrant's unwritten policies for transacting business with related parties are to first refer to the Partnership Agreement in connection with conducting such business or making payments and then, if circumstances arise for which a new related party transaction is contemplated, present the proposed transaction to certain officers of WRRC for review and approval.  If any matter in connection with such transaction might be unclear under the terms of the Partnership Agreement, such matter is presented to general or outside counsel for review prior to any such transaction being entered into by Registrant.




- 12 -





Corporate Governance





As discussed elsewhere in this Annual Report, Registrant does not have any directors, although as noted above Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant. Under Nasdaq Stock Market independence standards, Mr. Richman, Mr. Hussey and Mr. Krafnick would not be considered independent as they serve as officers of WRRC, a General Partner of Registrant. Although Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under Nasdaq rules, Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee. The Registrant is not a listed issuer whose securities are listed on a national securities exchange, or an inter-dealer quotation system which has requirements that a majority of the board of directors be independent, and Registrant is not required to have an audit committee which consists of independent directors and meets the other requirements of the Securities Exchange Act of 1934 and the rules promulgated thereunder.





Item 14.  Principal Accounting Fees and Services.





Registrant’s independent registered public accounting firm billed Registrant the following fees for professional services rendered in the years ended December 31, 2010 and 2009:





2010


2009Audit Fees

$
23,900


$
23,900Audit-Related Fees


—



—Tax Fees

$
4,000


$
4,000All Other Fees


—



—





Audit fees consist of fees for the annual audit and review of Registrant’s interim consolidated financial statements and assistance with and review of documents filed with the SEC.  Tax fees generally represent fees for annual tax return preparation.  There were no other accounting fees incurred by Registrant in 2010 and 2009.





The Audit Committee has adopted a set of pre-approval policies and procedures under which, pursuant to the requirements of the Sarbanes-Oxley Act of 2002, all audit and permitted non-audit services to be performed by Registrant’s independent registered public accounting firm require pre-approval by the Audit Committee.  The Audit Committee approved all 2010 and 2009 principal accountant fees and services.


- 13 -


PART IV





Item 15.  Exhibits, Financial Statement Schedules.





(a)
1
Financial Statements - The list of Financial Statements appears on page F-2.





2
Schedules - All schedules are omitted because the required information is inapplicable or it is presented in the consolidated financial statements or the notes thereto.





3
Exhibits:





3(A)
Form of Amended and Restated Agreement of Limited Partnership of Secured Income L.P., incorporated by reference to Exhibit A to the Prospectus contained in Registrant’s Registration Statement on Form S-11 (File No. 33-9602) (the "Form S-11").





3(B)
Certificate of Limited Partnership of Secured Income L.P., incorporated by reference to Exhibit 3(B) of Form S-11.





10(A)
Escrow Agreement between Registrant and FirsTier Bank N.A., incorporated by reference to Exhibit 10(A) of Form S-11.





10(B)
Carrollton Partnership Interest Acquisition Agreement, incorporated by reference to Exhibit 10(B) of Form S-11.





10(C)
Carrollton Partnership Agreement, as amended, and guarantees to certain obligations by Carrollton Developer General Partner, incorporated by reference to Ex­hibit 10(C) of Form S-11.





10(D)
Carrollton Property Management Agreement, as amended, incorporated by reference to Exhibit 10(D) of Form S-11.





10(E)
Fieldpointe Complex Financing Documents, incorpor­ated by reference to Exhibit 10(B) of Form S-11.





10(F)
Form of Guaranteed Investment Contract Escrow Agree­ment, incorporated by reference to Exhibit 10(F) of Form S-11.





10(G)
Columbia Partnership Interest Acquisition Agreement, incorporated by reference to Exhibit 10(G) of Form S-11.





10(H)
Columbia Partnership Agreement and guarantee of cer­tain obligations of Columbia Developer General Partner, incorporated by reference to Exhibit 10(H) of Form S-11.





10(I)
Columbia Property Management Agreement, incorporated by reference to Exhibit 10(I) of Form S-11.





10(J)
Columbia Construction and Development Agreement, in­corporated by reference to Exhibit 10(J) of Form S-11.





10(K)
Westmont Complex Financing Documents, incorporated by reference to Exhibit 10(K) of Form S-11.





10(L)
Westmont Complex Financing Restructuring Agreement, incorporated by reference to Form 10-K for fiscal year ended December 31, 1992.





10(M)
Columbia Partnership Cost-Sharing and Indemnity Agreement in connection with the mortgage modification dated May 27, 1993, incorporated by reference to Form 10-K for fiscal year ended December 31, 1993.





10(N)
Amendment of Partnership Agreement of Columbia Partnership dated May 27, 1993, incorporated by reference to form 10-K for fiscal year ended December 31, 1993.





10(O)
Amendment of Guaranty Agreement of Columbia Partnership dated May 27, 1993, incorporated by reference to form 10-K for fiscal year ended December 31, 1993.






- 14 -




10(P)
Columbia Partnership Financing Agreement dated May 27, 1993, incorporated by reference to form 10-K for fiscal year ended December 31, 1993.





10(Q)
Carrollton Partnership Assignment and Modification of Deed of Trust dated August 30, 1993, incorporated by reference to Form 10-K for fiscal year ended December 31, 1993.





10(R)
Columbia Partnership Assignment and Intercreditor Agreement dated as of June 1, 2000, incorporated by reference to Form 10-K for fiscal year ended December 31, 2000.





10(S)
Columbia Partnership Mortgage Note dated as of June 1, 2000, incorporated by reference to Form 10-K for fiscal year ended December 31, 2000.





10(T)
Columbia Partnership Multifamily Note (Multistate) dated as of June 1, 2000, incorporated by reference to Form 10-K for fiscal year ended December 31, 2000.





10(U)
Executed Agreement of Purchase and Sale of The Westmont dated January 26, 2006, incorporated by reference to Form 10-K for the fiscal year ended December 31, 2005.





10(V)
First Amendment to Purchase and Sale Agreement of The Westmont dated February 8, 2006, incorporated by reference to Form 10-K for the fiscal year dated December 31, 2005.





(24)
Power of Attorney, incorporated by reference to Exhibit 25 of Form S-11.





(27)
Financial Data Schedule.





(28)
Market Analysis dated February 1, 1985 of REDE Assoc­iates, incorporated by reference to Exhibit 28 of Form S-11.





(31.1)
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer**





(31.2)
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer**





(32.1)
Section 1350 Certification of Chief Executive Officer**





(32.2)
Section 1350 Certification of Chief Financial Officer**





(99.1)
Pages 13 through 19 of Registrant’s prospectus dated March 5, 1987, incorporated by reference to Registrant’s filing pursuant to Rule 424(b)(3) under the Securities Act of 1933 dated April 27, 1987 (File No. 33-9602).





(99.2)
Pages 20 through 30 of Registrant’s prospectus dated March 5, 1987, incorporated by reference to Registrant’s filing pursuant to Rule 424(b)(3) under the Securities Act of 1933 dated April 27, 1987 (File No. 33-9602).





(99.3)
Pages 30 through 36 of Registrant’s prospectus dated March 5, 1987, incorporated by reference to Registrant’s filing pursuant to Rule 424(b)(3) under the Securities Act of 1933 dated April 27, 1987 (File No. 33-9602).





(99.4)
Pages 37 through 48 of Registrant’s prospectus dated March 5, 1987, incorporated by reference to Registrant’s filing pursuant to Rule 424(b)(3) under the Securities Act of 1933 dated April 27, 1987 (File No. 33-9602).





(99.5)
Pages 64 through 67 of Registrant’s prospectus dated March 5, 1987, incorporated by reference to Registrant’s filing pursuant to Rule 424(b)(3) under the Securities Act of 1933 dated April 27, 1987 (File No. 33-9602).





**Filed herein.


- 15 -





SIGNATURES








Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized on the 31st day of March 2011.








SECURED INCOME L.P.




By: Wilder Richman Resources Corporation, General Partner




By:  /s/  Richard Paul Richman


Richard Paul Richman - Chief Executive Officer




By:  /s/ James Hussey


James Hussey - Chief Financial Officer






By:  WRC-87A Corporation, General Partner




By:  /s/ Richard Paul Richman


Richard Paul Richman - Executive Vice President and Treasurer








- 16 -





CONSOLIDATED FINANCIAL STATEMENTS AND


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





SECURED INCOME L.P. AND SUBSIDIARY





DECEMBER 31, 2010, 2009 AND 2008














SECURED INCOME L.P. AND SUBSIDIARY





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS




Table of Contents
PageReport of Independent Registered Public Accounting Firm
F-3Consolidated Financial StatementsConsolidated Balance Sheets
F-4Consolidated Statements of Operations
F-5Consolidated Statements of Partners' Equity (Deficit)
F-6Consolidated Statements of Cash Flows
F-7Notes to Consolidated Financial Statements
F-8







F-2




REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To the Partners


Secured Income L.P.





We have audited the consolidated balance sheets of Secured Income L.P. and Subsidiary (the “Partnership”) as of December 31, 2010 and 2009, and the related consolidated statements of operations, partners’ equity (deficit) and cash flows for the years ended December 31, 2010, 2009 and 2008.  These consolidated financial statements are the responsibility of the Partnership’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.  The Partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financing reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Secured Income L.P. and Subsidiary as of December 31, 2010 and 2009, and the results of their operations, changes in their partners’ equity (deficit) and their cash flows for the years ended December 31, 2010, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.








/s/ Reznick Group, P.C.


Sacramento, California


March 31, 2011




F-3


SECURED INCOME L.P. AND SUBSIDIARY





CONSOLIDATED BALANCE SHEETS


DECEMBER 31, 2010 AND 2009




2010


2009ASSETSProperty and equipment, net of accumulated depreciation

$
2,368,956


$
2,704,139Cash and cash equivalents


649,843



797,648Mortgage escrow deposits


806,380



758,880Investment in bond


101,238Tenant security deposits


42,462



63,022Interest and accounts receivable


2,341Prepaid expenses


219,111



214,801Intangible assets, net of accumulated amortization


260,162



281,877$
4,450,493


$
4,820,367LIABILITIES AND PARTNERS' EQUITY (DEFICIT)LiabilitiesMortgage payable

$
7,770,499


$
8,019,780Accounts payable and accrued expenses


105,140



101,773Tenant security deposits payable


40,473



52,116Due to general partners and affiliates


18,678



18,3657,934,790



8,192,034Commitments and contingenciesPartners' equity (deficit)Limited partners (984,369 units issued and outstanding)


598,301



693,098General partners


(3,904,126
)


(3,878,310
)Noncontrolling interest


(181,953
)


(186,455
)Accumulated other comprehensive income


3,481(3,484,297
)


(3,371,667
)$
4,450,493


$
4,820,367








See notes to consolidated financial statements.




F-4





SECURED INCOME L.P. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF OPERATIONS


YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008




2010


2009


2008REVENUERental

$
2,625,209


$
2,459,141


$
2,601,135Interest


5,618



3,494



26,987Other


49,367



64,866



76,745TOTAL REVENUE


2,680,394



2,527,501



2,704,867EXPENSESAdministration and management


509,545



517,082



514,006Operating and maintenance


515,154



506,891



556,895Taxes and insurance


485,284



466,360



420,816Financial


523,886



538,440



551,575Depreciation and amortization


437,759



424,331



1,193,542TOTAL EXPENSES


2,471,628



2,453,104



3,236,834NET INCOME (LOSS)


208,766



74,397



(531,967
)Other comprehensive income


3,481COMPREHENSIVE INCOME (LOSS)

$
212,247


$
74,397


$
(531,967
)NET INCOME (LOSS) ATTRIBUTABLE TOGeneral partners

$
2,022


$
693


$
(5,391
)Limited partners


200,173



68,573



(533,662
)Noncontrolling interest


6,571



5,131



7,086$
208,766


$
74,397


$
(531,967
)NET INCOME (LOSS) ALLOCATED PER UNIT OF LIMITED PARTNERSHIP INTEREST

$
.20


$
.07


$
(.54
)Weighted number of units outstanding


984,369



984,369



984,369








See notes to consolidated financial statements.




F-5


SECURED INCOME L.P. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)


YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008




AccumulatedotherLimited


General


Noncontrolling


comprehensiveTotal


partners


partners


interest


incomePartners' equity (deficit), December 31, 2007

$
(1,588,552
)

$
2,185,315


$
(3,764,081
)

$
(9,786
)

$Distributions to partners


(495,486
)


(492,185
)






(3,301
)Net income (loss)


(531,967
)


(533,662
)


(5,391
)


7,086Partners' equity (deficit), December 31, 2008


(2,616,005
)


1,159,468



(3,769,472
)


(6,001
)Distributions to partners


(830,059
)


(534,943
)


(109,531
)


(185,585
)Net income


74,397



68,573



693



5,131Partners' equity (deficit), December 31, 2009


(3,371,667
)


693,098



(3,878,310
)


(186,455
)Distributions to partners


(324,877
)


(294,970
)


(27,838
)


(2,069
)Net income


208,766



200,173



2,022



6,571Accumulated other comprehensive income


3,481















3,481Partners' equity (deficit), December 31, 2010

$
(3,484,297
)

$
598,301


$
(3,904,126
)

$
(181,953
)

$
3,481








See notes to consolidated financial statements.




F-6


SECURED INCOME L.P. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF CASH FLOWS


YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008




2010


2009


2008CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)

$
208,766


$
74,397


$
(531,967
)Adjustments to reconcile net income (loss) to net cash provided by operating activitiesDepreciation and amortization expense


437,759



424,331



1,193,542Increase in mortgage escrow deposits


(47,500
)


(52,924
)


(32,774
)Amortization of premium on investment in bond


1,433Accrued interest at date of investment in bond


1,750Decrease (increase) in tenant security deposits


20,560



131,588



(22,215
)Decrease (increase) in interest and accounts receivable


(2,341
)


3,662



2,016Increase in prepaid expenses


(4,310
)


(24,770
)


(19,492
)Increase in accounts payable and accrued expenses


3,367



10,213



2,861Increase (decrease) in tenant security deposits payable


(11,643
)


(67,106
)


2,202Increase in due to general partners and affiliates


313Net cash provided by operating activities


608,154



499,391



593,873CASH FLOWS FROM INVESTING ACTIVITIESInvestment in bond


(100,940
)Acquisition of property and equipment


(80,861
)


(132,684
)


(130,645
)Net cash used in investing activities


(181,801
)


(132,684
)


(130,645
)CASH FLOWS FROM FINANCING ACTIVITIESMortgage principal payments


(249,281
)


(234,589
)


(220,763
)Distributions to noncontrolling interest


(2,069
)


(185,585
)


(3,301
)Distributions to partners


(322,808
)


(644,474
)


(492,185
)Net cash used in financing activities


(574,158
)


(1,064,648
)


(716,249
)NET DECREASE IN CASH AND CASH EQUIVALENTS


(147,805
)


(697,941
)


(253,021
)Cash and cash equivalents at beginning of year


797,648



1,495,589



1,748,610CASH AND CASH EQUIVALENTS AT END OF YEAR

$
649,843


$
797,648


$
1,495,589SIGNIFICANT NONCASH INVESTING ACTIVITIESUnrealized gain on investment in bond

$
3,481SUPPLEMENTAL INFORMATIONFinancial expenses paid

$
524,919


$
540,540


$
555,211








See notes to consolidated financial statements.




F-7


SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2010, 2009 AND 2008





Note 1 - Organization and Summary of Significant Accounting Policies





Secured Income L.P. (the "Partnership"), was formed on October 10, 1986 under the Revised Uniform Limited Partnership Act of the State of Delaware for the purpose of acquiring real estate limited partner interests.  The Partnership filed a Form S-11 registration statement with the Securities and Exchange Commission effective March 5, 1987 covering an offering of up to 2,500,000 limited partnership units at $20 per unit.  The admission of limited partners (the “Limited Partners”) occurred on October 9, 1987, December 18, 1987 and April 12, 1988.





Carrollton X Associates Limited Partnership ("Carrollton") was organized under the laws of the District of Columbia on December 18, 1985 for the purpose of constructing and operating a residential rental apartment complex and related facilities under Section 221(d) 4 of the National Housing Act.  The Partnership acquired a 98.9% limited partner interest in Carrollton in October 1987.  The complex consists of 252 units located in Frederick, Maryland and operates under the name of Fieldpointe Apartments (“Fieldpointe”).





Columbia Westmont Associates, L.P., formerly Columbia Associates ("Columbia") was formed as a limited partnership on February 6, 1985 to acquire an interest in real property located in New York, New York and to construct and operate thereon a 163 unit apartment complex which also includes a parking garage and approximately 9,400 square feet of commercial space.  The Partnership acquired a 98.9% limited partner interest in Columbia in December 1988.  The complex operated under the name of The Westmont.  Columbia sold The Westmont in July 2006.





Columbia and Carrollton are referred to collectively as the “Operating Partnerships.”  Carrollton has an underlying mortgage that qualifies for tax-exempt financing as a result of restricting at least 20% of its apartment units for low to moderate income tenants as defined in applicable guidelines.  Columbia’s mortgages also had such qualifications and restrictions.





In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360; Subtopic 10, the property and equipment of Carrollton is classified as held and used in the accompanying consolidated balance sheets and Carrollton’s results of operations are classified as continuing operations in the accompanying consolidated statements of operations.  The cumulative depreciation for the period during which the property and equipment of Carrollton was classified as held for sale has been recorded as expense in the year ended December 31, 2008 (see Note 4).  There was no depreciation expense recorded for the years ended December 31, 2007 and 2006.





Principles of Consolidation





The consolidated financial statements include the assets, liabilities and results of operations that relate to the business of the Partnership and Carrollton.  All significant inter-partnership balances and transactions have been eliminated in consolidation.  A general partner and special limited partner noncontrolling interest of 1.1% is held in Carrollton.





Property, Equipment and Depreciation





Land, buildings and improvements are carried at the lower of cost or net realizable value.  Net realizable value represents the net cash flow necessary to recover costs exclusive of debt service.  Depreciation is provided for in amounts sufficient to relate the cost of buildings and improvements to operations over their estimated service lives by use of the straight-line method over a 25-year life.  Personal property is carried at cost and is being depreciated over its estimated service life of 7 years using the straight-line method.  Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred.  Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation and the resulting gains or losses are reflected in the consolidated statements of operations.




F-8





SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 1 - Organization and Summary of Significant Accounting Policies (Continued)





Impairment of Long-Lived Assets





In accordance with ASC Topic 360; Subtopic 10, long-lived assets, primarily property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.  For long-lived assets, the Partnership recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.  No such adjustment for impairment losses has been required during the three year period ended December 31, 2010.





Cash and Cash Equivalents





The Partnership considers all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents.





Fair Value Measurements





ASC Topic 820 clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability and establishes the following fair value hierarchy:





Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access;





Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; and





Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions as there is little, if any, related market activity.





For instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety.





Investment in Bond





Investment in bond is classified as available-for-sale and represents an investment that the Partnership intends to hold for an indefinite period of time but not necessarily to maturity.  Any decision to sell such investment would be based on various factors, including significant movements in interest rates and liquidity needs.  Investment in bond is carried at estimated fair value and unrealized gains or losses are included as items of comprehensive income (loss) and are reported as a separate component of partners’ equity (deficit).





The premium on investment in bond is amortized using the effective yield method over the life of the investment.  The amortized premium offsets interest revenue.  Realized gain (loss) on redemption or sale of investment in bond is included in, or offset against, interest revenue on the basis of the adjusted cost of the investment at the date of redemption or sale.





Accounts Receivable and Bad Debts





Tenant receivables are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management.  Accounting principles generally accepted in the United States of America (“GAAP”) requires that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method.




F-9




SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 1 - Organization and Summary of Significant Accounting Policies (Continued)





Intangible Assets and Amortization





Mortgage costs are amortized over the term of the loan using the straight-line method.  GAAP requires that the effective yield method be used to amortize such costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective yield method.  Acquisition fees are amortized over twenty-five years using the straight-line method. Estimated amortization expense for each of the next five years following December 31, 2010 is as follows: 2011 - $21,715; 2012 - $21,715; 2013 - $15,471; 2014 - $15,471; and 2015 - $15,471.





Rental Revenue





Rental revenue is recognized as rentals become due.  Rental payments received in advance are deferred until earned. All leases between Carrollton and the tenants of Fieldpointe are operating leases.





Advertising Costs





Advertising costs are expensed as incurred.





Income Taxes





The Partnership is a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income and deductions are passed through to and are reported by its owners on their respective income tax returns.  The Partnership's federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity.  The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities.  Accordingly, these consolidated financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure.  In accordance with ASC Topic 740; Subtopic 10, the Partnership has included in Note 12 disclosures related to differences in the financial and tax bases of accounting.





Net Income (Loss) per Unit of Limited Partnership Interest





Net income (loss) per unit of limited partnership interest is calculated based upon the weighted average number of units outstanding, 984,369 for each of the years 2010, 2009 and 2008.  Losses are allocated to the Limited Partners until such time as the Limited Partners' equity reaches zero as a result of loss allocations.





Use of Estimates





The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.





Recent Accounting Pronouncements





In January 2010, the FASB issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”), amending ASC Topic 820 to increase disclosure requirements regarding recurring and nonrecurring fair value measurements.  The Partnership adopted ASU 2010-06 for the year ended December 31, 2010, except for the disclosures about activity in Level 3 fair value measurements which will be effective for the Partnership’s fiscal year beginning January 1, 2011.  The adoption of ASC Topic 820 did not have a material impact on the Partnership’s consolidated financial statements and is not expected to have a material impact on the Partnership’s consolidated financial statements once fully implemented.




F-10





SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 2 - Cash and Cash Equivalents





As of December 31, 2010, the Partnership and Carrollton have cash and cash equivalents of $649,843.  Such amount is held in accounts at two financial institutions, for both the Partnership and Carrollton, in which all non-interest bearing transaction accounts are fully insured by the Federal Deposit Insurance Corporation (“FDIC”) and the aggregate amount of all other accounts at each institution is insured up to $250,000 by the FDIC. The entire amount is FDIC insured as of December 31, 2010.





Note 3 - Investment in Bond





The Partnership carries its investment in bond as available-for-sale because such investment is used to facilitate and provide flexibility for its obligations.  Investment in bond is reflected in the accompanying consolidated balance sheet as of December 31, 2010 at estimated fair value and is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements (see Note 1).  The unrealized gain of $3,481 is reflected as accumulated other comprehensive income in the accompanying consolidated financial statements as of and for the year ended December 31, 2010.





As of December 31, 2010, certain information concerning investment in bond is as follows:





Description and maturity

Amortized

cost


Gross

unrealized

gain


Gross

unrealized

loss


Estimated

fair valueCorporate debt securityCallable in September 2013

$
97,757


$
3,481


$
—


$
101,238





Note 4 - Property and Equipment





Property and equipment as of December 31, 2010 and 2009 is summarized as follows:





2010


2009Land

$
1,226,061


$
1,226,061Buildings and improvements


9,909,588



9,909,588Furniture and equipment


1,332,762



1,251,90112,468,411



12,387,550Less accumulated depreciation


10,099,455



9,683,411$
2,368,956


$
2,704,139





Depreciation expense for the years ended December 31, 2010, 2009 and 2008 was $416,044, $402,616 and $1,171,827, respectively.  The 2008 expense represents the cumulative depreciation for the three year period ended December 31, 2008.  There was no depreciation expense recorded for the years ended December 31, 2007 and 2006 due to the property and equipment of Carrollton being classified as held for sale as of December 31, 2006 and 2005 (see Note 1).  Depreciation expense attributable to the year ended December 31, 2008 was $392,351.




F-11





SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 5 - Intangible Assets





Intangible assets as of December 31, 2010 and 2009 is summarized as follows:




2010


2009Acquisition fees

$
156,100


$
156,100Mortgage costs


624,486



624,486780,586



780,586Less accumulated amortization


520,424



498,709$
260,162


$
281,877





Amortization expense for each of the years ended December 31, 2010, 2009 and 2008 was $21,715.





Note 6 - Mortgage Escrow Deposits





Mortgage escrow deposits (see Note 7) as of December 31, 2010 and 2009 represent escrows held by Carrollton’s mortgage lender in the amount of $806,380 and $758,880, respectively.





Note 7 - Mortgage Payable





Carrollton is obligated under the terms of a note in the original amount of $10,494,100, which note was financed through tax exempt revenue bonds issued by the City of Frederick, Maryland and is insured by the Federal Housing Administration (“FHA”), an organizational unit within the United States Department of Housing and Urban Development (“HUD”), pursuant to Section 221(d)(4) of the National Housing Act of 1934, as amended.  The note bears interest at 6.09% per year with monthly payments of principal and interest of $60,900 due through maturity in February 2028.  The note is collateralized by a first mortgage lien on the property plus other amounts on deposit with the lender (see Note 6).  Pursuant to agreements, Carrollton is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners.  The balance of the mortgage payable as of December 31, 2010 and 2009 is $7,770,499 and $8,019,780, respectively.





Aggregate annual maturities of the mortgage for each of the next five years and thereafter are as follows:





2011

$
264,8932012


281,4832013


299,1132014


317,8452015


337,752Thereafter


6,269,413$
7,770,499





Note 8 - Transactions with Affiliates





The management agent for Fieldpointe is an affiliate of two of the General Partners and one of Carrollton’s general partners.  The management agent is entitled to property management fees equal to 4% of residential income collected.  In addition, the management agent is entitled to a reporting fee of $5 per unit per month for bookkeeping and reporting services.  The maximum annual management and reporting fees may not exceed 5% of gross collections.  Such fees of $120,843, $114,616 and $120,532 were charged to operations for the years ended December 31, 2010, 2009 and 2008, respectively.  Accrued management fees of $313 are included in due to general partners and affiliates in the accompanying consolidated balance sheet as of December 31, 2010.




F-12





SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 8 - Transactions with Affiliates (Continued)





An affiliate of two of the General Partners and one of Carrollton’s general partners provides investor services for which it receives an amount equal to .5% of the gross proceeds from the offering of Partnership units; the Partnership incurred $98,437 for each of the three years ended December 31, 2010.  Accrued investor service fees of $18,365 as of December 31, 2010 and 2009 are included in due to general partners and affiliates in the accompanying consolidated balance sheets.





Note 9 - Partners' Equity (Deficit)





Partnership Allocation





Profits and losses of the Partnership are allocated 1% and 99% to the General Partners and Limited Partners, respectively, until such time as the Limited Partners' capital reaches zero as a result of loss allocations, after which all losses are allocated to the General Partners.





Partnership Distributions





In accordance with the respective partnership agreements, to the extent that Carrollton and Columbia generated net operating cash flow in any year at a level sufficient, when distributed to the Partnership, to enable the Partnership to satisfy the allocable portion of the Limited Partners' 8% preferred return for such year without utilizing amounts generated from guaranteed investment contracts (the last of which matured in January 1998), the excess amounts generated from the guaranteed investment contracts would be paid or distributed to the general partners of Carrollton and/or Columbia, whichever generated such level of operating cash flow.  No such excess distributions were generated during the terms of the guaranteed investment contracts.  The distributions in connection with the sale of The Westmont included a full return of the Limited Partners’ invested capital, originally $20.00 per Unit. An additional distribution made on April 4, 2007 resulted in the Limited Partners being paid at an annualized rate of 8% through August 4, 2006, the date the Limited Partners received the return of their invested capital.  The Partnership made distributions in the amount of approximately $0.25 per Unit on March 31, 2010 to Unit holders of record as of December 31, 2009 and $0.50 per Unit on July 21, 2009 to Unit holders of record as of June 30, 2009 and on July 25, 2008 to Unit holders of record as of June 30, 2008.  The distributions to the Limited Partners reflected in the accompanying consolidated financial statements as of and for the years ended December 31, 2010 and 2009 include withholding taxes paid by the Partnership to the State of Maryland on behalf of the Limited Partners of approximately $.05 per Unit and $.04 per Unit, respectively.  The distributions reflected in the accompanying consolidated financial statements include distributions to the Partnership’s general partners and amounts distributed by Carrollton to its general partners.





Note 10 - Commitments and Contingencies





Lender Restrictions and Requirements





Carrollton is subject to various financing requirements and restrictions, including (i) the rental of not less than 20% of the dwelling units to individuals or families who qualify as low or moderate income tenants; (ii) restrictions on the sale of the apartment complex; and (iii) restrictions on the amount of cash flow which may be distributed to its partners.





BusinessConcentrations


Carrollton’s principal asset is a 252-unit apartment complex.  Carrollton’s operations are concentrated in the multifamily real estate market and it operates in a heavily regulated environment. The operations of Carrollton are subject to the administrative directives, rules and regulations of federal agencies, including, but not limited to, HUD.  Such administrative directives, rules and regulations are subject to change by an act of Congress or an administrative change mandated by HUD.  Such changes may occur with little notice or inadequate funding to pay for the related cost, including the additional administrative burden, to comply with a change.




F-13





SECURED INCOME L.P. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


DECEMBER 31, 2010, 2009 AND 2008





Note 11 - Fair Value of Financial Instruments





The estimated fair value of amounts has been determined using available market information, assumptions, estimates and valuation methodologies.





Cash and Cash Equivalents, Mortgage Escrow Deposits and Tenant Security Deposits





The carrying amount approximates fair value.





Interest and Accounts Receivable





The carrying amount approximates fair value due to the short-term nature of the receivable.





The estimated fair values of the Partnership’s other financial instruments as of December 31, 2010 and 2009 are disclosed elsewhere in the notes to the consolidated financial statements.





Note 12 - Reconciliation of Financial Statement Income (Loss) to Taxable Income





A reconciliation of the financial statement net income (loss) of the Partnership to the income tax income for the years ended December 31, 2010, 2009 and 2008 is as follows:





2010


2009


2008Financial statement net income (loss)

$
208,766


$
74,397


$
(531,967
)Excess depreciation for financial reporting purposes due to purchase accounting treatment, net of excess tax depreciation resulting from a step-up in basis (including adjustment described in Note 4)


273,559



279,050



1,144,665Deferred revenue


(1,621
)


3,562



(2,564
)Amounts allocated to other partners of Carrollton and other


190



(43,708
)


5,867Tax return income

$
480,894


$
313,101


$
586,001






F-14