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would pay 100 percent of its payroll costs, but accrue and deduct
115 (or 120) percent as payable to the partnerships. These
accruals included the "override", plus interest accrued but never
paid, plus "management fees", based upon amounts that the
partnerships allegedly paid to Bucci, or to his alter ego MITA.
Machise accrued and deducted these amounts in excess of its
basic payroll costs, but never paid them. The alleged payments
occurred only in the form of offsetting bookkeeping entries and
checks or notes that were integral parts of the money circles.
The partnerships received no cash from these purported payments.
Although the payments were designed to appear to be loan
repayments, their effect was simply to complete the circle so
that Machise could deduct amounts that it would never pay.
Additionally, the services for which Machise allegedly paid
"overrides" did not bring about any economic consequence in the
business conducted by Machise. They are thus without effect for
tax purposes. See Haas v. Commissioner, 248 F.2d 487, 489 (2d
Cir. 1957), remanding T.C. Memo. 1956-165. Although the
partnerships allegedly undertook to provide employees and to save
administrative and overhead costs for Machise, there were no such
savings. Machise and its officers continued to bear the
administrative costs. They kept and maintained records, decided
whom to hire and fire, made work assignments, and decided about
payments for the pension plan. They provided the money for the
payroll costs. In terms of Machise's business, the partnerships
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