Читать книгу Taxation Essentials of LLCs and Partnerships - Larry Tunnell - Страница 8

In 1990, Leventhal & Horwath, then the eighth largest accounting firm in the United States, filed for bankruptcy protection under pressure from several lawsuits stemming from the failure of many of its audit clients. Like all accounting firms at the time, the firm was organized as a general partnership. The firm eventually dissolved, but its partners remained responsible for damage assessments awarded to claimants against the firm. Most of these partners had not been personally involved in the engagements targeted by the various lawsuits. Nonetheless, in addition to losing their jobs, each of the partners was left with personal responsibility for tens of thousands of dollars of partnership liabilities stemming from the lawsuits that drove the firm out of business. According to published reports, these liabilities generally exceeded the personal assets of most of the partners, meaning that many partners faced the prospect of personal bankruptcy following dissolution of the firm.

Due to concerns about partner liability, it can be very difficult to attract investment capital to businesses organized as general partnerships. Moreover, there are many activities in which it is neither necessary nor desirable for all partners to be involved in management of the partnership or its affairs. For example, partnerships are often used to raise capital to purchase real estate (office buildings, apartment complexes, and the like), or to drill oil or gas wells. These activities require large amounts of money, but do not necessarily require the input of each partner in deciding which properties to acquire or where to drill for oil and gas. Organization of the operating or drilling companies as corporations would alleviate concerns over liability and participation in management but would raise new concerns over double taxation and lack of flexibility. Limited partnerships are designed to accommodate the business needs of these activities while still allowing them to be conducted in partnership form.

In a limited partnership, the power to bind the partnership contractually, and to make all management decisions, is vested in the hands of the general partners. Other partners, referred to as limited partners, make capital investments in the partnership but are not allowed to participate in management and cannot enter into binding contracts on behalf of the partnership. Reflecting their restricted ability to influence partnership affairs, these partners are shielded from responsibility for partnership obligations. Full liability for partnership debts rests with the general partners, who control the partnership's actions. Therefore, limited partners are in much the same position as shareholders in a corporation. They invest money in the partnership's business without expressing any voice in how the business is conducted. If the venture is profitable, the partners share in the profits. If it fails, they stand to lose their entire investment. However, their losses are limited to the amounts directly invested in the firm. Unlike a general partner, partnership liabilities do not follow the limited partners individually, and therefore their exposure is limited to the amounts actually invested (or legally pledged) to the firm.