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was nominally a managing partner for W & A, but he was not aware
that he held that position. He did not engage in management of
W & A.
Fred had installed Andrew as the managing partner of W & A
in an attempt to comply with a provision of section 469, added to
the Internal Revenue Code by the Tax Reform Act of 1986. Fred
had believed that a tax shelter partnership could continue to use
the cash method of accounting if investors with more than a 65-
percent interest--here, allegedly, Andrew--participated in the
partnership's activity. It later became clear that Fred's
interpretation was not correct.
W & A originally had six partners, consisting of four
individuals and two corporations. All were clients of BBPA.
There were no prospectuses or formal offering sheets for W & A.
On September 26, 1986, W & A, MPC, BBPA, and Machise entered
into an employee leasing agreement, prepared by Fred. This
agreement was much less detailed about the parties' rights and
responsibilities than the prior versions had been. Nevertheless,
as with the prior partnerships, W & A was to provide all the
individual employees and independent contractors required by
Machise to conduct its business for the period January 1 through
December 31, 1987. The employees and independent contractors
were the same employees and independent contractors who worked
for Machise before the W & A employee leasing agreement was made.
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