Phil and his brother, Karl, decide to start up a new business offering to provide computer software for sale. They establish a partnership. Both Phil and Karl are unaware of the serious financial burden of a partnership is: O limited finance. O limited liability. O pressure to pay Goods and Services Tax (GST). O unlimited liability.

Phil and his brother, Karl, decide to start up a new business offering to provide computer software for sale. They establish a partnership. Both Phil and Karl are unaware of the serious financial burden of a partnership is: O limited finance. O limited liability. O pressure to pay Goods and Services Tax (GST). O unlimited liability.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter11: Partnerships: Distributions, Transfer Of Interests, And Terminations

Section: Chapter Questions

Problem 44P

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Similar questions

Sam wants to help his brother, Lou, start a new business. Lou isan auto mechanic but has little business sense, so he needs Sam to help him make business decisions. Should this partnership be arranged as a general partnership or a limited partnership? Why? Should they consider any other form for structuring their business? In your post, only discuss the partnership entity options, do not discuss other business types such as S-corporations.
Farah and David decide to form a sports memorabilia retail partnership. They have known each other since business graduate school and have always worked well together on various projects. The business is doing well but cash flow is very tight. Farah takes several calls from vendors asking for payment. He believed David had been paying the bills. When he asks about this, David admits to embezzling from the partnership. What liability does Farah face as a result of the theft? Are you for or against a partnership? Please explain.
Marco decides to take $2,000 from the partnership for the repair and record it as an expense of the partnership. He believes that this is appropriate since he needs his car to get to work every day. Is Marco behaving ethically? Why or why not? Who is affected by Marco’s decision? What other alternatives might Marco consider?
Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability. 1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors? 2) What would be the outcome if there is no Partnership Deed? 3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act? 4)Who are considered silent or sleeping partners?
Amy and Lester are partners in operating a store. Without consulting Amy, Lester enters into a contract to purchase $10,000 of merchandise for the store. Amy says she did not authorize the order and that she could have purchased the same merchandise for $7,000. Amy refuses to pay for the order. The vendor sues the partners. a. Must the partnership pay for the merchandise? If yes, how much? b. Assuming the partnership is a general partnership, can Amy’s personal assets be taken to pay for the merchandise?
which type of organization should be formed. Rob and Bran want to form a snow removal business. They are deciding between a general partnership and a limited liability company. Bran says it is important that the two have limited liability and do not pay corporate income taxes.
All of the following are examples of partnerships EXCEPT: (a) Brian and his friend Manuel formed a limited liability partnership (LLP) for their landscaping business. (b) Ethan and his wife, Angelique, operate their restaurant activities as a qualified joint venture. (c) Frank and his sister Lenore co-own rental property. They do not provide any services for the activity. (d) Venus and her brother Stefan do not have a written partnership agreement. Together they own and operate an unincorporated graphic design company.
Moe, Edita, and Hunter have been operating a business together as partners without a partnership agreement for several years. Hunter unexpectedly passes away, what will most likely become of the partnership? A. The partnership will be immediately dissolved B. Hunter’s interest will automatically be divided between Moe and Edita C. Moe and Edita will need to find a new partner to take Hunter’s place D. Moe and Edita will be able to purchase Hunter’s interest from his estate
Mr. Ahmed, the general partner of a big furniture store in Muscat is going to contribute a bigger share of money to settle the partnership's liabilities to its creditors. Why Ahmed is going to do so? None of the choices are correct General partners will contribute more because they have more money General partners have unlimited liability General partners have a distinct legal personality
Henry is the sole general partner in Middle Ranch Limited, a limited partnership. There are five limited partners. One day, Henry went to the grocery store to purchase groceries for himself. He forgot his personal checkbook. However, he had the partnership's checkbook. Unable to otherwise pay for the groceries, he wrote a check from the partnership account, thinking that he "owned" part of the money in the account anyway.
John, Jeff, and Jane decided to engage in a real estate venture as a partnership. John invested $80,500 cash and Jeff provided office equipment that is carried on his books at $79,800. The partners agree that the equipment has a fair value of $117,100. There is a $28,100 note payable remaining on the equipment to be assumed by the partnership. Although Jane has no physical assets to invest in the partnership, both John and Jeff believe that her experience as a real estate appraiser is a valuable skill needed by the partnership and is a basis for granting her a capital interest in the partnership.Assuming that each partner is to receive an equal capital interest in the partnership, (b) Record the partnership formation under the goodwill method, and assume a total goodwill of $85,500. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required,…
Jack and Jill decided to pool their money and start a water delivery business. Since they trust each other so much, they did not draw up any legal documents for the business. During the first year of business, they earned $50,000 which was net of $10,000 paid to Jill as a guaranteed payment. During the second year of business, they decided to limit their liability exposure by forming an LLC. Was a partnership formed during the first year? If a partnership was formed, how much income will be taxed at the partnership level? For the second year, do they need to file a partnership tax return?