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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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