Investment Contracts and Limited Partnerships
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This article is from the What Every Investor Should Know.
Investment Contracts and Limited Partnerships
Investors sometimes pool money into a common enterprise managed for profit by a third party. This is called an investment contract. Such enterprises may involve anything from cattle breeding programs to movie productions. This is often done through the establishment of a limited partnership in which investors, as limited partners, own an interest in a venture but do not take an active management role. Some of these securities are issued primarily for purposes of reducing income tax liability.
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