Saylororgbooks saylororg page 662 3 what is the

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Saylor URL: Saylor.org page 662 3. What is the personal liability for partners for breach of contract made by one of the partnership’s members? In a general partnership, under Section 306 RUPA, partners are “jointly and severally” liable, meaning each partner is personally liable for any breach of contract by the partnership or its partners without limit. Saylor URL: Saylor.org page 738 5. How is a partnership taxed more favorably than a corporation? A partnership is allowed pass-through taxation. Partnerships do not pay income taxes. They are allowed to deduct certain business expenses from their revenues, lowering the partnership’s net income, which is then “passed through” or distributed according to the partnership agreement to the partners. The partners are taxed on the distributions as ordinary income. Corporations are allowed to deduct more business expenses, but they must pay taxes on their net income, which is then distributed to shareholders. The shareholders must claim the distributions on their personal income taxes, thus creating double taxation.
Chapter 22 1. What is the liability of the general partner? The limited partner? “The general partners are liable as in a general partnership, and they have the same fiduciary duty and duty of care as partners in a general partnership.” Saylor URL: Saylor.org page 779 In a general partnership, under Section 306 RUPA, partners are “jointly and severally” liable, meaning each partner is personally liable for any breach of contract by the partnership or its partners without limit. Saylor URL: Saylor.org page 738 “The limited partners are only liable up to the amount of their capital contribution, provided the surname of the limited partner does not appear in the partnership name (unless his name is coincidentally the same as that of one of the general partners whose name does appear) and provided the limited partner does not participate in control of the firm.” Saylor URL: Saylor.org page 779 If a limited partners surname is part of the partnership name or the limited partner actively participates in the running of the business aside from the “safe harbors” given under ULPA-1985 then that partner assumes liability as a general partner. Safe Harbors: “Acting as an agent, employee, or contractor for the firm; or being an officer, director, or shareholder of a corporate general partner Consulting with the general partner of the firm Requesting or attending a meeting of partners Being a surety for the firm Voting on amendments to the agreement, on dissolution or winding up the partnership, on loans to the partnership, on a change in its nature of business, on removing or admitting a general or limited partner” Saylor URL: Saylor.org page 777 Under ULPA-2001 the control rule has been eradicated.

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