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

2024
Views:

203

Pages:

2
Author:

bratrochanter

Summary: Partnership and Business Ownership Issues 1. Limited Partnership for Film Production    Limited Partnership: Suitable for a project with multiple phases, where passive investors (limited partners) contribute capital and general partners manage operations. Alternative: An LLC might be preferable, offering limited liability for all members and flexibility in profit sharing and management. Setup Consideration: Ensure the firm retains certain control rights and secures returns on its investment through a well-drafted operating agreement. 2. Best Form for Minor League Baseball Team   Recommendation: LLC or S Corporation. o LLC provides limited liability, tax benefits, and flexibility in management structure, allowing for sole decision-making by the general manager. o S Corporation offers pass-through taxation but limits ownership to 100 shareholders. Reasoning: The choice ensures profit-sharing aligns with capital contributions, while operational control remains with the general manager. 3. Partnership in Lottery Winnings Dispute   Facts: Yurko verbally agreed to share lottery winnings in exchange for help with scratching tickets. He later won $100,000 and refused to share. Outcome: If the court finds the verbal agreement formed a partnership, the three women could claim their share of the winnings based on their contribution to the venture. 4. Workers’ Compensation Dispute: Tammy Duncan   Issue: Was Tammy a co-owner or an employee? The diner’s insurer denied her workers' compensation claim, citing her co-ownership status. Key Evidence: Lease agreement suggests co-management, not ownership. If Tammy lacked profit-sharing or ownership interest, she remains an employee and eligible for compensation. 5. Implied Partnership in Tech Collaboration  Facts: King and Willson pooled resources, shared decisions, and agreed to split profits.  Analysis: These facts suggest an implied partnership, as their actions meet the criteria of shared ownership, management, and profit-sharing under RUPA. 6. Claim of Partnership: John Williams vs. Pizzaville   Facts: Williams was labeled a "managing partner" but received a fixed salary plus a share of gross profits. Analysis: A partnership requires profit-sharing and shared decision-making. If Williams lacked ownership and decision-making rights, he is likely an employee, not a partner. 7. Shared Office Space: Lawler and Claydon   Facts: Two lawyers shared office space and expenses but maintained separate practices. Outcome: Sharing expenses alone does not establish a partnership unless they co-own a business, share profits, and jointly manage the practice. Without such evidence, no partnership exists. Key Takeaways:    Partnership Formation: Requires shared ownership, profit-sharing, and joint management. Mere shared expenses or labels (e.g., "partner") do not suffice. Transferable Interests: Partners may transfer their financial interest but not their management rights unless all partners agree. Careful Drafting: Clear agreements and documentation are essential to avoid unintended partnerships or disputes over ownership and liability.