Chapter 31 Basic Partnership Concepts & Formation and Operations Practice Questions

Partnership by estoppel

A judicially created partnership that may, at the court's discretion, be imposed for the purpose of fairness.

Information returns

A tax return submitted by a partnership that only reports the income earned by the business.

Articles of Partnership

A written agreement that sets forth each partner's rights and obligations with respect to the partnerships.

Partnership

An agreement by two or more persons to carry on, as co-owners, a business for profit.

Pass-through entity

Any entity that does not have its income taxed at the level of that entity; examples are partnerships' S corporations' and limited liability companies.

Charging order

Court order entitling a creditor to attach profits or assets of a partner on dissolution of the partnership.

Which of the following are essential elements to determine whether a partnership exists?

-A sharing of profits or losses -An equal right to be involve in the management of the business -A joint ownership of the business.

if a third party knows that a partner had no authority to commit the partnership, the partner's actions with the third party still binds the partnership and its partners.

False

If the partnership agreement does no indicate how the profits will be share, the Uniform Partnership Act provides that profits will be shared equally.

True

The sharing of the profits and losses creates a legal inference that a partnership exists

True

if a partner withdraws prematurely from a "partnership for a term" that partner had breached the partnership agreement and may be liable for resulting losses.

True

What type of liability occurs when a third party has the option of suing all the partners together or one or more of the partner separately?

joint and several liability.

Which of the follow fiduciary duties does a partner own the partnership? (select all the apply)

loyalty and care

Eduardo and Larson enter into a partnership 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.