Chapter 2: Partnership Concepts Formation and Operationships (Practice) Flashcards
One basic difference between partnership and agency law is that:
each partner has an ownership interest in the firm.
When there is no expressed partnership agreement what governs the operation of partnership?
The Uniform Partnership Act
Pass-through entity
Any entity that does not have its income taxed at the level of that entity; examples are partnerships, S. Corps., and LLC’s
Information return
A tax return submitted by a partnehsip that only reports the income earned by the business
Partnership
An agreement by two or more persons to carry on, as co owners, a business profit
3 elements to determine whether a Partnership exists.
- Sharing of profits or losses
- Joint ownership of the business
- An equal right to be involved in the mgmt of the business
The sharing of both profits and losses creates a legal inference that a partnership exists.
True
Under the common law, a partnership was treated only as
As an aggregate of its memebers
In all cases, joint ownership of property creates a partnership.
False
Which of the following does NOT represent a major difference between an agency relationship and a partnership?
a. An agent is liable for the acts of the principle, but partners are not liable for the act of the partnership.
A partner’s profit from the partnership is taxed as individual income to the individual partners
True
the two fiduciary duties that a partner owes the partnership
- Care
2. Loyalty
Eduardo and Larson enter into a partnership agreement to sell gourmet dog biscuits, but they do not specify how long it will last. Consequently, it will end:
Whenever either partner wants to end it
From the list below, which is NOT an ordinary right of partners in a general partnership?
Dividends
Oksana and Stan form a general partnership. In most states if they do not specify their respective management rights,
both partners have equal mgmt rights
