02 -- Noncorporate Limited Liability Entities

02 -- Noncorporate Limited Liability Entities - CPA BEC -...

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CPA BEC - STUDY UNIT 2 Noncorporate Limited Liability Entities: Core Concepts A. Limited Partnerships 1. A limited partnership is a separate legal entity formed by two or more persons under a state statute. It has one or more general partners and one or more limited partners. A general partner assumes management of the partnership and has full personal liability. A limited partner is an investor who makes a contribution of cash or other property to the partnership in exchange for an interest. This investor is not personally liable for partnership debts and not active in management. 2. Formation. A written certificate of limited partnership must be filed as a public record. A certificate of amendment may be filed for “any proper purpose” determined by the general partners. It is filed after admission or withdrawal of a general partner or continuation of the business after an event of withdrawal of a general partner . a. A limited partnership agreement is commonly executed by the partners. A limited partnership may carry on any business that a general partnership may conduct, with statutory exceptions (e.g., banking). 3. Capitalization. A limited partnership may be financed by the partners’ contributions of cash, property, services, or promises to make contributions. Absent a written partnership agreement , profits, losses, and distributions are shared in proportion to the value of the partners’ contributions received (and not returned). a. Partnership interests (general and limited) are assignable. They are rights to share in profits and losses and to receive distributions. Assignment does not dissolve the limited partnership or entitle the assignee to become a partner. 4.
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This note was uploaded on 08/29/2010 for the course CBEAM BEC taught by Professor Gleim during the Spring '10 term at De La Salle Lipa.

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02 -- Noncorporate Limited Liability Entities - CPA BEC -...

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