Quick LP Facts

Only general partners may carry out the day-to-day business operations, including signing contracts and binding the LP.

General partners should operate through another business structure to avoid personal liability for the acts, deeds and debts of the partnership.

Limited partners must remain passive to avoid attachment of personal liability.

Limited partners’ financial liability to the partnership is limited to the amount of their investment.

The IRS defines limited partners as passive positions – therefore limited partners may not claim active participation tax benefits and losses are never allowed against active income. This could be a real problem for real estate investors who hold their real estate properties inside a LP.

No restrictions on the number or location of owners; however, non- U.S. residents are required to have tax withholdings made on distributions of income before the money leaves the U.S.

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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