Читать книгу Taxation Essentials of LLCs and Partnerships - Larry Tunnell - Страница 10

1 Midge is a 10% limited partner in Wild Catter, an oil and gas drilling partnership. She received her partnership interest in exchange for a $10,000 investment in the partnership. The balance in her capital account as of the beginning of the current year was $10,000. She has made no additional contributions to the partnership and received no distributions. In January, a pipe burst on one of the partnership's properties and several thousand gallons of crude oil leaked onto surrounding pastureland. The resulting damage rendered the land unusable and rendered all the partnership's assets worthless. The landowner sued the partnership, demanding actual and punitive damages of $2,500,000. Under the terms of the partnership agreement, Midge receives 5% of partnership losses and 10% of partnership profits. She is not obligated to restore deficits in her capital account. What does Midge stand to lose if the suit is successful?$2,500,000.$250,000.$10,000.$0.

2 In the preceding question, assume that Midge was the only general partner of the partnership, and that the partnership allocated 50% of partnership losses to her, but only 10% of partnership profits. In addition to her initial investment of $10,000, how much would she stand to lose if the lawsuit against the partnership is successful?$2,500,000.$1,250,000.$10,000.$0.

As noted, a limited partnership offers liability protection to limited partners, whereas general partners remain fully liable for unsatisfied claims of the partnership's creditors. Two other forms of partnerships are available which provide some protection for general partners as well. The first, called a limited liability partnership (LLP), did not exist until after the failure of Leventhal & Horwath discussed in example 1-1. Following the bankruptcy of the nation's eighth largest accounting firm in 1990, states began to yield to the pressure of professional services organizations (principally accounting and law firms) and passed laws allowing for LLPs. In an LLP, the partnership itself remains liable for all the actions taken by its partners and employees. However, individual partners in the partnership are shielded from personal liability for losses caused by the actions of partners other than themselves.¹ That is, each partner is personally responsible for losses or other liabilities stemming from his or her own actions but is shielded from personal risk for the actions of his or her partners. Therefore, in an LLP, every partner enjoys at least some of the protections provided to limited partners in a limited partnership. The partners do not have to give up their voice in management, nor their rights to bind the partnership contractually, however, in order to obtain this protection. The LLP therefore moves a substantial step closer to a corporation in terms of the benefits and protections it provides to its members.