Corporation and Business

1537 Words Apr 23rd, 2013 7 Pages
CHAPTER 4
1. Is a limited partnership treated as a separate entity for all purposes? If not, give an example of an instance in which a limited partnership is treated as an aggregate of its partners.

No, they are not always considered separate entities when dealing with substantive liabilities and duties of the partners, the limited partnership is considered an aggregate of the individual partners.

2. Why is the fiduciary duty between the general partner and limited partners even greater than the fiduciary duty between partners in a general partnership?

Because the general partner holds majority of the interest and the limited partners are prohibited for participating in the control of the business.

3. Suppose that Beth
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9. Suppose that Katherine, Brianna, and Paige have formed a limited partnership to operate a video arcade. Katherine is the general partner. She has contributed $2,000 and her time to get the operation running. Brianna and Paige, the limited partners, have each contributed $3,000. After one year of operation, the arcade has debts of $10,000, and the three partners decide to discontinue their business and the limited partnership. Brianna and Paige want their investment returned to them. Who should Katherine, who is winding up the business, pay first, Brianna and Paige, or the creditors? How much will Brianna and Paige receive? How about Katherine?

Katherine is winding up the business, she should pay the creditors first and Brianna and Paige will be compensated for their contribution and partnership interest. Katherine would get the remaining balance if there is any.

10. Suppose a limited partnership has just one general partner, who suddenly dies. Will the partnership dissolve? Could a limited partnership continue if one of three general partners suddenly dies? If yes, under what circumstances?

Yes, it is not always necessary for limited partnerships to dissolve if one general partner dies as long as there is one other general partner. If there is provisions of the partnership agreement permit the business of the limited partnership to be carried on by the remaining general partner, and that partner does
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