limited partnership

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limited partnership

n. a special type of partnership which is very common when people need funding for a business, or when they are putting together an investment in a real estate development. A limited partnership requires a written agreement between the business management, who is (are) general partner or partners, and all of the limited partners. Each limited partner makes an investment of funds into the partnership and is supposed to receive a pre-stated share of the profit, which is ordinarily greater than that of each of the general partners up to a point (such as return of the investment), and, thereafter, the limited partners will receive a lesser share than the general partner(s). The limited partners also will receive the tax benefit of a "passed through" loss (a personal income tax deduction for part of the loss) during the development stages of the partnership when the expenses exceed any receipts. Quite often there is also a provision for eventual buy-out of the limited partners by the general partner(s). The limited partners may not participate in the management decisions of the partnership or they will lose their limited partnership status. They do have the power to vote to remove the general partner(s), although usually the partnership agreement is structured so that such removal is virtually impossible unless the general partner in question has committed fraud. Since the limited investors have no control of the conduct of the partnership they should make sure they have considerable knowledge about the reputation and record of the general partner(s) and the type of business. In fact, state laws require that there be some pre-existing acquaintanceship between the general and the limited partners or a detailed prospectus provided by the general partner(s) meeting very stringent and specific federal requirements of disclosure. The maximum number of limited partners is set by state law to prevent using interests in the limited partnership as if they were shares of stock in a corporation. In addition to priority in profit, tax deductions, and potential share in the success of the enterprise, the limited partner is "limited" in potential loss, since all he/she can lose is his/her investment, and the general partners alone are subject to claims, debts in bankruptcy and lawsuits against the partnership. Limited partnerships must file their name and names and addresses of general partners with the Secretary of State or other designated officer in the state in which the partnership is created so the public can find out who the responsible parties are. Like a corporation, a limited partnership may not have a name which is too similar to another limited partnership or corporation. (See: partnership, limited liability, partner, general partner)

limited partnership

a partnership under which it is possible for a person to become a partner upon terms that his liability to the creditors of the firm should be strictly limited (rather like that of a shareholder in a company). Such a person is in the position of a sleeping partner with limited liability. See also LIMITED LIABILITY PARTNERSHIP.
References in periodicals archive ?
TORONTO -- Canada Dominion Resources 2005 Limited Partnership (the "Partnership") announces receipt of its final prospectus relating to an initial public offering of limited partnership units of the Partnership ("Units") in all the provinces and territories of Canada.
469(c)(7) to treat all interests in rental real estate as one activity and (2) the treatment of interests in rental real estate held by a limited partnership.
This is why discounts are warranted when valuing gifts of limited partnership interests.
1402(a)(13) was enacted to combat the proliferation of limited partnership syndications aimed at obtaining Social Security coverage for the investors based on what is essentially investment income.
GLRS and Chimicles & Tikellis represented a Class of more than 18,000 limited partnership investors, whose votes were solicited in August 1998 for the approval of the sale of approximately one-half of the interests held by eight public Real Estate Associates Limited Partnerships (REAL Partnerships) to a newly-formed real estate investment trust (REIT) formed by some of the defendants.
Because of what practitioners perceive as an erosion of the asset protection benefit of the family limited partnership, some practitioners are now recommending that family limited partnerships be used in conjunction with offshore trusts designed exclusively for creditor protection.
Co-Lead Counsel have extensive experience in securities class action litigation and litigation specifically dealing with limited partnerships as a form of investment and as a form of business organization.
Ritzenhoff") for limited partnership units in Income Fund II.
After making some calculations, reviewing with him the use of `discounts' in computing the gift taxes on gifts of interests in a family limited partnership holding his now devalued securities," said Mr.
Initially, these offers were targeted at limited partnerships that had undergone a reorganization which resulted in a publicly traded REIT.

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