limited partnership


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Related to limited partnership: Master limited partnership

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 ?
Package of transparency and anti-corruption measures to address the abuse of Scottish Limited Partnerships that has been linked to money laundering
Existing partnerships, limited partnerships and limited liability companies are governed by prior law until Jan.
1.469-ST(e)(3)(i)(B) to LLC members, concluding that the regulations were obsolete because the LLC rules create a new type of business entity materially different from a limited partnership in that LLC members are permitted to actively participate in managing the business.
With the proposed regulations, the IRS is changing its position on this issue and more narrowly defining when a partner's interest will be treated as a limited partnership interest for purposes of the passive activity rules.
Once the agreement is drawn, the parents then contribute assets to the FLP, which in turn issues both general and limited partnership interests.
"(A) Such interest is designated a limited partnership interest in the limited partnership agreement or the certificate of limited partnership, without regard to whether the liability of the holder of such interest for obligations of the partnership is limited under the applicable State law; or
The limited partnership form of business encourages individuals to invest without risking more than the capital they have contributed.
Finally, the Ashtenne Industrial Fund Limited Partnership has purchased a 33,720 sq ft self- contained unit in Abercynon from TTG Properties Ltd.
The Business Law Section has joined the Tax Law Section and the Real Property, Probate and Trust Law Section in supporting an update of Florida's Uniform Limited Partnership Act.
Historically, market participants have used the term "tax credit value" to describe the price paid for an equity investor's limited partnership interest, which is more than just the component value of the dollar-for-dollar tax credits.
In December, Lehman Brothers purchased from third parties 80 percent of the limited partnership interest in Triad I for $12 million, enabling Triad I to repay CSL about $9 million in loans.

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