Cascade Partnership, James M. and Margaret C. Costello, Tax Matters Partner - Page 3

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               The partnership agreement also contained the statement that            
          “All decisions and management of the partnership shall be made by           
          the majority of the shares held by the partners.”  The                      
          partnership shares were in $1,000 units, with total capital                 
          investment set at $300,000.  No partner possessed a majority                
          percentage interest in Cascade.  The partner with the largest               
          percentage interest, as of the close of 1982, was William Smart.            
               Cascade, a TEFRA1 partnership for Federal tax purposes, was            
          formed as an investment vehicle for the 20 Price Waterhouse                 
          accounting partners to collectively invest as a limited partner             
          in Wall Street Associates (Wall Street), a partnership not                  
          subject to the provisions of TEFRA.  Wall Street issued a                   
          Schedule K-1 in Cascade’s name in care of Walsh.  By a letter               
          dated February 27, 1985, respondent notified Cascade of the                 
          commencement of an examination of Cascade’s 1982 and 1983 income            
          tax returns under the unified partnership audit procedures of               
          sections 6221-6233.2  The letter was addressed to “Cascade                  
          Partnership, Tax Matters Partner, Third Floor, Times Square                 
          Building, Seattle, Washington 98101.”  An Information Document              



               1  TEFRA partnership provisions were added to the Code by              
          the Tax Equity & Fiscal Responsibility Act of 1982 (TEFRA), Pub.            
          L. 97-248, sec. 402(a), 96 Stat. 324, 648.                                  
               2  All section references are to the Internal Revenue Code             
          in effect for the year in issue, and all Rule references are to             
          the Tax Court Rules of Practice and Procedure, unless otherwise             
          indicated.                                                                  




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