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10 Cards in this Set
- Front
- Back
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General Partners
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AKA sponsor or manager
-Manage the entity and have unlimited liability |
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Limited partners
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Limited liability-can only lose what they invested
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An investors 'cost' or 'basis' is increased by
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-Addtl contributions by partners
-Partnership income |
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An investors 'cost' or 'basis' is decreased by
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-Distributions of partnership
-Partnership losses -Non-deductible partnership expenses -Depletion deductions for oil and gas partnerships |
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T or F
Adjusted basis is important to a limited partner bc a LP can never write-off more than their adjusted basis |
T
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Recourse loan
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Loans for which the inv is held personally responsible
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At risk investment
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Initial cash inv + recourse loans(these inc adjusted basis)
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Non-recourse loans
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Do NOT hold inv personally responsible as partnership property is used as collateral
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Advantages of DDP
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1.Income and expenses flow thru
2.No double taxation 3.LP does not pay federal income taxes but must report share of net income on for K-1 4.Capital costs can be depreciated 5.Diversification of financial risk and professional management |
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Disadvantage of DDP
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1.Lack of liquidity
2.LPs lack control over management 3.Possible changes in the tax code 4.IRS scrutiny 5.Assessment of addtl funds 6.AMT consequences 7.Loss of inv |
