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Qulart and then exiting as payments on Qulart's 12-percent note
to Machise.
The $303,500 line-of-credit note from BBPA, representing the
partners' cash investment, remained unchanged until December 31,
1987, when it was assigned to Qulart to be applied as a payment
on the MIT 84 partners' notes to Qulart. That amount passed from
Qulart as payment to MPC on Qulart's 12-percent note for
$3,035,000 originally issued by Qulart to Machise, now held by
MPC. MPC offset the Qulart note against liabilities to BBPA, and
the note was canceled. This line-of-credit note receivable was
thus treated in the same manner as BBPA's corresponding line-of-
credit obligations to MIT 83 for $284,300 and to MIT 82 for
$190,000. The net effect was that, as of December 31, 1987, the
MIT 82, MIT 83, and MIT 84 partnerships could no longer collect
BBPA's $777,800 line-of-credit obligations, which had represented
the cash that the partners had paid in and which BBPA and Machise
had divided between themselves.
For the year 1987, MIT 84, like the other partnerships,
changed its method of accounting from the cash method to the
accrual method.
On January 1, 1988, Fred prepared a Termination Agreement to
end the obligations of MIT 84 and MPC under the employee leasing
agreement. Fred signed the Termination Agreement under the
heading "Bryen & Bryen, P.A." on behalf of both MIT 84 and MPC.
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