University:
Indiana University Bloomington
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

234

Pages:

2
Author:

bratrochanter

This document addresses key aspects of limited partnerships, limited liability limited partnerships (LLLPs), and specific case law and tax considerations. Here’s a breakdown of the main points: 1. Limited Partnerships (LPs) and LLLPs: o LPs and LLLPs provide different liability and control dynamics suitable for investors seeking limited liability without management responsibilities. LPs involve general partners who manage the business and assume unlimited liability, while limited partners contribute capital but do not participate in management, having their liability limited to their investment. o LLLPs are a variant in which all partners, including general ones, have limited liability, aligning with modern business needs to protect personal assets while facilitating capital infusion. 2. Uniform Limited Partnership Act (ULPA): o The ULPA, particularly the 2001 version, offers standardized legal guidelines for LPs and LLLPs. It establishes management rights, partner liabilities, and structure, aiming to centralize management in general partners while positioning limited partners as passive investors. o The Act allows LPs and LLLPs to operate indefinitely, assuming compliance with state requirements, including filing a certificate with general partner information, business purpose, and liability status. 3. Global Business Environment for LLCs: o LLC structures in various countries, while similar to U.S. LLCs, impose specific limitations, such as caps on member numbers and mandatory inclusion of "limited" in their names. These LLCs typically offer limited liability and restrictive membership terms, distinguishing them from public corporations. 4. Tax and Estate Planning: o LPs, especially family limited partnerships, serve as estate planning tools, often for asset transfer and tax reduction. Family partnerships allow asset gifts to children while maintaining control through the role of the general partner. However, tax benefits depend on the legal setup and adherence to tax regulations. 5. Moser v. Moser Case Study: o This case examines the complexities of family limited partnerships in estate division during a divorce. Here, a family limited partnership, set up for estate planning, became subject to asset division as marital property. Key findings included improper asset segregation and lack of irrevocable gift completion to children, leading the court to treat partnership assets as personal assets. 6. Default Rights and Liabilities in LPs and LLLPs: o LPs and LLLPs require statutory compliance, and partners’ rights to profits, capital contributions, and withdrawal are governed by agreements or default state laws. Limited partners generally cannot manage but may vote on fundamental matters. Transference of partnership interest is restricted unless specifically allowed in the partnership agreement. This document thus provides an in-depth legal, structural, and financial overview of LPs and LLLPs, illustrating their role in capital formation, liability limitation, and tax planning while highlighting specific legal considerations for family partnerships.