Partnerships

Question 1

What is a partnership?

Answer 1

A partnership is an association of two or more persons to carry on a for-profit business as co-owners

Question 2

Key test to apply to ascertain whether a business arrangement is a partnership

Answer 2

whether there is a sharing of the profits from the business –> arrangement is presumed to be a partnership

Question 3

When does the presumption of a partnership not apply?

Answer 3

• Payment of a debt
• Interest payments
• Rent
• Wages
• Goodwill

Question 4

Transferable partnership interest

Answer 4

A partner may transfer the right to share in the profits and losses of the partnership and to receive distributions

Question 5

What right is created in the transferee of partnership interest?

Answer 5

A right to receive distributions to which the transferor would otherwise be entitled

Question 6

Access to partnership’s records

Answer 6

• Partners and their agents: partnership must provide access to all its records
• Transferee: not entitled to have access to records because a transferee is not entitled to participate in the management of conduct of the partnership

Question 7

Partnership property

Answer 7

Property that is acquired in the name of the partnership

*Not property of the partners individually

Question 8

Governing law of partnerships

Answer 8

RUPA (Revised Uniform Partnership Act)