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from that activityoTransferability partner only has the right to transfer the value ofher partnership interest, not the interest itself Can pass down the value of her partnership interest but not the right to be a partner oFormation a partnership is an association of two or more co-owner who carry on a business for profitEach co-owner general partner Easy to form – but they should have a written agreement oTaxes -entity does not pay for taxes itself°Terminating a Partnership°A dissociation occurs when a partner quits. Dissociation
oA partner always has the power to leave a partnership but may not have the right oMight have to pay damages for any harm that her departure causesoThe partnership can either buy out the departing partners and continue in business or wind up the business and terminate the partnership Three Steps to Terminationo1. DissolutionDepend on the partnership If the partners agreed in advance how long the partnership will last term partnershipA partner is dissociated and ½ of the remaining partners vote to wind up the partnership businessAll the partners agree to dissolveOr the term expires or the partnership achieves its goalPartners can leave at any time for any reason partnershipat willEvent occurs that the partners had agreed would cause dissolutionPartnership becomes illegal or A court determines that the partnership is unlikely to succeed o2. Winding upall debts of the partnership are paid, and the remaining proceeds are distributed to the partnerso3. Terminationhappens automatically once the winding up is finished partnership is not required to do anything official; it can go out of the world even more quietly and simply than it came in°Limited Partnership°(generally only used for estate planning purposeand high highly sophisticated investment vehicles)
°StructureMust have at least one limited partner and one general partner °LiabilityLimited partners are not personally liable but general partners are. Limited partners risk only their investment in the partnership which is called their capital contribution General partners are personally liable for the debts of the organization°°TaxesLimited partnerships are not taxable entities, Income is taxed only once before landing in a partners pocket °°FormationThe general partners must file a certificate of limited partnership with their secretary of state. Although most limited partnerships do have apartnership agreement, it is not required°ManagementGeneral partners have the right to manage a limited partnership. Limited partners are essentially passive investors with few management rights beyond the right to be informed about the partnership business°Transfer of OwnershipLimited partners have the right to transfer the value of their partnership