Chapter 2 - Nature and Formation of a Partnership
Income tax
Partnerships, except general professional partnerships are subject to the 30% income tax.
Partnership
A contract whereby two or more persons bind themselves to contribute money, property, or industry into a common fund with the intention of dividing profits among themselves.
Limited life
A partnership may be dissolved at any time by action of the partners or operation of law.
Mutual participation in profits
A partner has the right to share in partnership profits.
Legal entity
A partnership has legal personality separate and distinct from that of each of the partners.
Mutual agency
Any partner may act as agent of the partnership in conducting its affairs.
Dormant partner
He is both a silent and a secret partner.
Face value
If the asset contributed is in the form of cash, it is recorded on the partnership books at...
Agreed value
If the asset contributed is in the form of property or non-cash asset, it is recorded at...
Loan payable
Loans made by partners to the partnership, which are payable immediate by the partnership and are usually with interest.
General co-partnership
One consisting of general partners who are liable prorata and sometimes solidarily with their separate property for partnership liabilities.
Partnership at will
One for which no term is specified.
Limited partnership
One formed by two or more persons having as members one or more general partners and one or more limited partners, who as such are not bound by the obligations of the partnership.
Universal partnership of all present property
One in which the partners contribute all the properties which actually belong to each of them into a common fund.
Partnership with a fixed term
One in which the term which the partnership is to exist is agreed upon.
Open partnership
One wherein the existence of certain persons as partners is made known to the public by the members of the firm.
Secret partnership
One wherein the existence of certain persons as partners is not made known to the public by any of the partners.
Ordinary partnership
One which actually exists among the partners and also as to third persons.
Universal partnership of all profit
One which comprises all that the partners may acquire by their industry or work during the existence of the partnership.
De facto partnership
One which failed to comply with one or more of the legal requirements for its establishment.
De jure partnership
One which has complied with all the legal requirements for its establishment.
Particular partnership
One which has for its object determine things, their use or fruits, or a specific undertaking or the exercise of a profession or vocation.
Partnership by estoppel
One which in reality is not a partnership but is considered as one only in relation to those who, by their conduct or omission are precluded to deny or disprove the partnership's existence.
Non-trading partnership
One which is organized for the purpose of rendering services.
Capitalist partner
One who contributes capital in cash or property.
Capitalist-industrial partner
One who contributes cash, property, and industry.
Industrial partner
One who contributes industry, labor, skill, talent or service.
Silent partner
One who does not participate in the management of the partnership affairs.
Dormant partner
One who does not take active part in the management of the business and is not known to the public.
Nominal partner
One who is not really a partner, not being a party to the partnership agreement, but is made liable as a partner for the protection of innocent third persons.
Managing partner
One who manages actively the business of the partnership.
Secret partner
One who takes active part in the management of the business but whose connection with the partnership is concealed or unknown to the public.
Ostensible partner
One who takes active part in the management of the firm and is known to the public as a partner in the business.
Liquidating partner
One who takes charge of the winding up of partnership affairs upon dissolution.
General partner
One whose liability to third persons extends to his separate property.
Limited partner
One whose liability to third persons is limited only to the extent of his capital contribution to the partnership.
Trading partnership
One whose main activity is the manufacture and sale or the purchase and sale of goods.
Co-ownership of contributed assets
Property contributed to the partnership are owned by the partnership by virtue of its separate legal personality.
Goodwill
The acquisition of a sole proprietorship/s by a partnership by a sole proprietorship may involve the recognition of...
Articles of co-partnership
The agreement telling the terms and conditions of a partnership.
Loan receivable
The partnership may advance money to partners, other than withdrawals, in the form of loans.
Capital share
The percentage of equity that each of them will have in the net assets of the newly formed partnership.
Unlimited liability
The personal assets of any partner may be used to satisfy the partnership creditors' claims upon liquidation, if partnership assets are not enough to settle the liabilities to outsiders.
