Barry B. Bealor and Nancy L. Bealor, et al. - Page 112

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          agreement with MPC so as to avoid the risk of being required to             
          pay their notes without MPC paying the partners themselves.  Fred           
          intended that all the parties to the MIT 83 employee leasing                
          transactions would be "zeroed out" (with no further liabilities)            
          following the purported termination.  In addition, Fred never               
          considered having Bucci obtain any legal representation or                  
          independent advice other than Fred himself concerning the alleged           
          termination.                                                                
          MIT 83 Income                                                               
               On its partnership returns for 1985 and 1986, MIT 83                   
          reported partnership taxable income of $519,960.  On its                    
          partnership return for 1987, MIT 83 reported partnership taxable            
          income of $797,976.  This amount included one-fourth of the                 
          $2,437,470 deferred income that MIT 83 allocated over 4 years due           
          to the change in accounting method imposed by section 448.  To              
          this amount was added “fee income” of $231,253.  This fee income            
          included accrued interest payable from MPC and an item of                   
          “portfolio income” in the amount of $42,645.  The partnership’s             
          taxable income further reflects a deduction of management fees              
          payable to BBPA in the amount of $42,645--the same amount as the            
          “portfolio income”.                                                         
               On its partnership return for 1988, MIT 83 reported                    
          partnership taxable income of $360,236; this amount included one-           
          fourth of the $2,437,470 deferred income that it allocated over 4           
          years due to the change in accounting method, less $235,627,                




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