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BISK BEC - Ch 48 Partnerships

BISK BEC - Ch 48 Partnerships

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Published by myspamone
BISK BEC - Ch 48 Partnerships
BISK BEC - Ch 48 Partnerships

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Published by: myspamone on Nov 10, 2009
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I. Nature
A. Revised Uniform Partnership Act (RUPA)
 RUPA defines a partnership as an association of two or more persons to carry on a business for  profit as co-owners.
"To carry on a business" includes almost any type of profitable, legal activity.
The persons engaged in a partnership must be co-owners. Thisrequirement distinguishes a partnership from an agency. An agent may at times receive ashare of the profits of a business. However, an agent does not have a partner's proprietaryinterest in the business. There is a fiduciary relationship among the partners, and betweenthem and the partnership. Thus, each partner is an agent for the partnership and for allother partners.
For Profit
 Nonprofit, unincorporated associations such as religious or charitable groups,labor unions, or clubs, are not partnerships.
Generally, any person (entity) who is competent to contract may be a partner.
 a.An infant may be a partner, but only to the extent of the infant's power tocontract. Therefore, an infant may at any time withdraw her/his investmentunless, and to the extent that, the partnership is subject to creditors' claims.Furthermore, if liable for debts, an infant is liable only up to the amount of her/his contribution.b.A corporation may become a partner only where permitted by statecorporation laws.c.A partnership may become a partner in another partnership provided all thepartners agree to the arrangement.d.A trustee may become a partner if to do so would be prudent and in the bestinterest of the trust.e.RUPA allows general partnerships to convert to limited partnerships andvice versa. RUPA also allows general partnerships to merge with othergeneral partnerships and with limited partnerships.
B. Partnership Theories
RUPA embraces the entity theory of the partnership for some purposes, but itdoes away with the marshalling of assets. The entity theory is used for such matters astitle to partnership property, legal actions by and against the partnership, and continuityof existence.
 All property acquired by a partnership, by transfer or otherwise, becomespartnership property and belongs to the partnership as an entity, rather than to theindividual partners. RUPA abolishes the Uniform Partnership Act (UPA) concept of tenants in partnership. Generally, under RUPA, partners and third parties dealingwith partnerships will be able to rely on the record to determine whether property is
owned by the partnership. A partner's interest is the partner's share of the profitsand losses of the partnership and the partner's right to receive distributions. Thisinterest is personal property and can be transferred (RUPA uses the word transferinstead of assign) by the partner. The partners, by unanimous vote, may expel apartner who has transferred all of the partner's interest in the partnership.
For some purposes, a partnership still is treated as a collection of individuals;the partnership itself is not taxed; rather, each partner pays income tax on her/his share of the profits or losses, regardless of whether cash or other property is received.
C. Distinguished From Other Entities

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