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 ?
A limited partnership by its nature entails a general partner acting on behalf of the limited partners for all partnership matters.
A limited partner's objective should be to earn a profit on his or her investment.
The court stated that, because the regulations were silent as to the treatment of LLC members, the limited partner exception in Sec.
On July 25, 2016, Delek Logistics declared a quarterly cash distribution for the second quarter of $0.63 per limited partner unit, which equates to $2.52 per limited partner unit on an annualized basis.
In its analysis, the Tax Court found that the concept of a limited partner had become obscured over time because of the increasing complexity of partnerships and other flowthrough entities.
For the nine months ended September 30, 2008 the company has reported net income of USD63.2m, or USD1.06 per basic and diluted limited partner unit, compared to USD67.4m or USD1.13 per basic and diluted limited partner unit for the nine months ended September 30, 2007.
The sole limited partner was the Midland Mutual Life Insurance Co.
Delek Logistics Partners, LP (Delek Logistics) today declared its quarterly cash distribution for the second quarter 2016 of $0.63 per limited partner unit, or $2.52 per limited partner unit on an annualized basis.
Delek Logistics Partners (NYSE:DKL) declared on Monday that it will pay a distribution of USD0.63 per limited partner unit (USD2.52 per limited partner unit, annually) for the second quarter 2016.
1.1402(a)-2, Computation of Net Earnings from Self-Employment, the IRS attempted to define when an individual would be deemed a limited partner and thus to clearly distinguish when individuals would be treated as general partners for self-employment tax purposes.
The company has reported net income of USD29.1m, or USD0.48 of adjusted net income per diluted limited partner unit for the 2008 third quarter, compared to net income of USD38.7m, or USD0.83 of adjusted net income per diluted limited partner unit for the 2007 third quarter.
The first question the court considered was whether to treat the taxpayer as a limited partner or a general partner.

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