limited partnership

(redirected from Limited partner)
Also found in: Dictionary, Financial, Acronyms, Encyclopedia, Wikipedia.
Related to Limited partner: limited partnership, partnership, silent partner, nominal partner

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 copy of the general partner's letter to the limited partners, dated Nov.
Loans can be made by either general or limited partners.
Since by definition, an LLC member's liability is so limited, an LLC member is a limited partner for Sec.
The proposed regulations contradicted the normal approach of permitting a person who was both a general and limited partner to bifurcate his distributive share of LLC income and exclude the limited partner interest portion from SE tax.
The IRS has publicly ruled it possible, under certain circumstances, for a partner to exchange a general partner interest for a limited partner interest (or vice versa) without incurring tax liability from the transaction.
For purposes of requesting an advance IRS ruling, revenue procedure 89-12 requires the IRS not say the partnership lacks centralized management if limited partners own more than 80%.
the default and involvency of every party to the transaction), the financing corporation would call on the limited partners to make contributions to the extent of their personal liability on the Petunia-Venture note.
Citron, a doctor, became a limited partner in Vandom, a film production partnership, by paying $60,000 in cash in 1980.
The preferential limited partners might be entitled to a preference, such as a guaranteed payment for the use of capital as described in Sec.
The Agreement of Limited Partnership of the partnership requires that the combination be approved by holders of 75 percent of all outstanding units and limited partner interests.
The new proposed regulations provide guidance for treating an LLC member as a general or limited partner for purposes of SE tax.
Boardwalk Pipeline Partners, LP (NYSE: BWP) today announced that it has priced a public offering of 6,000,000 common units representing limited partner interests at a price of $29.

Full browser ?