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f. Insertion of Other Entities
In determining a lack of economic substance, we have found
significance in the fact that a promoter creates business
entities to shield a partnership's assets from third parties.
Helba v. Commissioner, 87 T.C. at 1011. Here, Fred manipulated a
number of entities purportedly participating in the employee
leasing programs in order to remove the participants' assets and
liabilities from the channels of genuine commerce. Beginning
with MIT 83, Fred inserted Qulart, a shell corporation, into the
investment and payment circles that occurred within the later
employee leasing partnerships. The stated purpose of Qulart was
to prevent Machise from assigning the notes involved in the
employee leasing operations to third parties.
Similarly, in 1986, Machise Personnel Co. (MPC), a
partnership that was essentially Bucci’s alter ego, acquired all
of the financial assets of Machise (subject to related
liabilities) previously generated by the yearly employee leasing
agreements to which Machise had been a party. Fred arranged this
acquisition in order to reassure lenders and suppliers of
Machise, who had questioned Machise's receivables and several
million dollars of liabilities to the MIT 80, MIT 81, MIT 82, and
MIT 83 partnerships.
Another new entity, a partnership named MITA, was formed on
January 1, 1983. Bucci had a 99-percent interest in MITA, and
Intercoastal had the 1-percent balance. MITA was formed to
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