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Machise but subsequently assigned to MPC. There is no evidence
that MPC issued any note for $1,974,901. A summary of the effect
of the MIT 82 Termination Agreement shows the following:
Owed by MPC to MIT 82 as unpaid $2,307,059
compensation fee
Accepted by MIT 80 in full satisfaction of (1,974,901)
amounts owed by MPC; this amount to be
used to offset Partners' notes to Machise
Amount forgone by MIT 82 in unpaid 332,158
compensation fees
Fred designed the Termination Agreement so that everything
would "zero out". He signed it under the heading "Bryen & Bryen,
P.A." on behalf of both MIT 82 and MPC. Fred explained "the
whole reason they [the MIT 82 partners] did it is to get rid of
the risk. They owed $2 million and if Machise [sic, read "MPC"]
did not pay the compensation fee, these partners would be after
me with guns."
Partnership Income of MIT 82
For the year 1986, MIT 82 reported partnership taxable
income of $428,142. This amount included the $473,458 payment,
in the form of a Machise demand note, of compensation fee income,
plus interest from BBPA of $30,669, less $75,985 in accounting
fees and management expenses to BBPA.
For the year 1987, MIT 82, like MIT 80, changed its method
of accounting from the cash method to the accrual method,
reflecting the new requirements of the Tax Reform Act of 1986.
MIT 82 accordingly reported partnership taxable income of
$840,069 for 1987. This consisted of $637,316, one-fourth of the
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