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direct MIT 85 to assign the note to Qulart in payment of amounts
they owed Qulart on their investor notes. No formal assignment
of this note, however, was ever made. The partners' notes were
nevertheless marked "Paid 1-1-88".
Fred signed the Termination Agreement under the heading
"Bryen & Bryen, P.A." on behalf of both MIT 85 and MPC.
On its partnership return for 1988, MIT 85 reported
partnership taxable income of $1,419,986, consisting of
$1,571,520 (the remaining one-half of the $3,143,039 deferred
income that was originally allocated over 2 years due to the
change in accounting method), less $151,532, which it called a
"Contract Renegotiation fee". This amount corresponds to the
amount that MIT 85 agreed to forgo in exchange for early payment
to terminate the employee leasing agreement, less an accounting
fee to BBPA of $1.
For the years 1986, 1987, and 1988, Fred, as vice president
of BBPA, the tax matters partner of MIT 85, has filed an amended
Form 1065 as a protective administrative adjustment request.
Therein he seeks to have the income reported by MIT 85 for those
years reduced to zero, in the event that we determine MIT 85 to
be a sham, not entitled to deduct the losses for 1985. Those
claims are pending in docket No. 3453-92. As with the other
partnerships, respondent has agreed that such adjustments would
be appropriate if we so determine.
After the termination, MPC still owed MIT 85 some $755,514.
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