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as may be mutually agreed between the Partnership and
the Company * * *.
* * * * * * *
(d) The Partnership shall have the exclusive
right to determine the contractor to be used to fulfill
the Partnership's obligations under this Agreement.
Fred provided that the term of the employee leasing
agreement between MIT 80 and Machise would be for 1 year so that,
in each succeeding year, he could bring in more investors who
would be able to deduct their shares of the first-year loss of a
new and different tax shelter partnership. Bruce signed the
employee leasing agreement on behalf of the partners in MIT 80,
writing the words "by power of attorney" below each signature.
Journal entries indicate that MIT 80 advanced 100 percent of
its $2.4 million capital to Intercoastal on July 29, 1980,
although MIT 80 was not specifically required to do so by the
employee leasing agreement. The journal entries reflect that
these advances took the form of MIT 80's further endorsement of
$2.4 million in checks that originally had been drawn by
Intercoastal, made payable to the MIT 80 investors, and deemed to
have been used by them as their initial investment in MIT 80.
However, the journal entries are the only documents indicating
the endorsements; MIT 80 did not in fact endorse these checks to
Intercoastal. None of the checks entered banking channels;
instead, as Fred intended, they circled back to Intercoastal,
their drawer.
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