Limited Partnership

Limited Partnership

Limited Partnership means:
an entity in which one or more persons, with unlimited liability, called general partners, manage the partnership, while one or more other persons contribute only capital. The latter group of partners, called limited partners, have no right to participate in the management and operation of the business and assume no liability beyond the capital contributed. Investments – in real estate and oil and gas, for example – that pass both profits and losses on to investors. A limited partnership is often used for real estate ownership because of favorable tax treatment allowing pass-through of losses and avoiding double taxation of income. However, if a limited partnership has more characteristics of a corporation than of a partnership, it will be construed as an association taxable as a corporation. By definition, limited partnerships are passive investments, subject to the passive-loss rules. See unincorporated association.

U.S. and other Developed Countries International Tax Meaning

Business entity made up of two types of partners: general partners and limited partners, the extent of whose liability depends on their role and contribution to partners. A general partner is involved in the management and day-to-day operation of the partnership and is jointly and severally liable for all obligations of the partnership. A limited partner only makes a financial contribution to the partnership and shares in the profits; he is liable for partnership obligations only to the extent of his investment. Limited partners are usually restricted from taking an active part in the management of the business of the partnership or from allowing their name to be used in the conduct of the business.


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