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instructions, the exclusive right and duty to conduct the
operations of the Pop Phonomasters program. More specifically,
Mr. Pasternak was authorized to maintain books and records and to
pay all ordinary and necessary expenditures without consulting
other participants.
As Pop Phonomasters participants began receiving notices of
deficiency regarding their investments, some of them contacted
Mr. Pasternak about the matter. In response to their inquiries,
and in his capacity as CTO, Mr. Pasternak mailed a form letter to
each of the Pop Phonomasters participants regarding the notices
of deficiency received by them. The form letter was drafted by
Mr. Young's law firm; however, the letters were signed by Mr.
Pasternak and were printed on "Phonorecords Phonomaster Leasing"
letterhead and stated:
Dear Co-tenant:
As you are aware, the Internal Revenue Service has been
conducting an investigation into the tax liabilities of
certain co-tenants participation in Pop Phonomaster
Leasing Program. We were recently informed that certain co-
tenants have received Statutory Notices of Deficiency.
It appears that certain of these investigations by the
IRS involve substantial and controlling common questions of
law or fact.
Accordingly, if you wish to join in a consolidated
effort (joint Tax Court Petition) return an executed copy of
the enclosed Consent Form by June 24, 1985 since your
petition will very probably have to be filed with the United
States Tax Court, Washington, D.C., by July 11, 1985.
To help me and/or my representative prepare the
petition, promptly deliver to me all available information
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