Series 65 - Partnerships

One disadvantage of investing in a general partnership versus a limited partnership is that

All general partners have unlimited liability

Flow through tax structure

Flow-through tax structure. Income, capital gains, and capital losses are passed directly on to the investors and reported on their personal income tax returns.

A disadvantage of investing in a general partnership versus a limited partnership is:

General partners have unlimited liability

C Corporations are taxed by

• Double taxation

An S Corporation is characterized (4)

• Limited Liability • 100 or fewer shareholders • Flow-through tax treatment - Continuity of life

Limited Partnerships are taxed

• Pass through entities for tax purposes - all passed through to the partners who declare the income on their own tax returns

Investing in a limited partnership is (4)

• passive activity • Investors must understand the tax treatment for partnerships • Income and losses generated by the partnership is absorbed by the investor • All tax information to be reported on Form K-1 by the partnership

The advantage of investing in a limited partnership include:

The ability to limit risk

What is the liability for loss for an investor in a limited partnership?

The investor's basis

Do S Corporations pay fed taxes on earned income?

• Does not pay fed corp taxes on income earned

What are the advantages of a limited liability company (LLC) compared to an S Corporation?

A simpler managerial structure