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Business Organizations with Tax Planning
Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

1-12 Business Organizations with Tax Planning 12.syn


Classification of Partnerships


Zolman Cavitch

Chapter Summary


This chapter of Business Organizations with Tax Planning (Matthew Bender) surveys some of the common definitions and descriptions of partnerships, discusses the uniform laws that pertain to various forms of partnerships, and examines traditional and modern classifications and types of partnerships.

The chapter covers the trend among legal scholars to refrain from providing an exact and comprehensive definition of a partnership, and provides some of the commonly cited definitions and descriptions of a partnership, including that contained in the Uniform Partnership Act, which defines a partnership as an association of two or more persons to carry on as co-owners a business for profit.

The chapter also traces the history and adoption of the Uniform Partnership Act (UPA) and the Revised Uniform Partnership Act (RUPA). Under both UPA and RUPA, the partnership agreement governs the relations among the partners, as well as the relations between the partners and the partnership; the provisions of UPA and RUPA are applicable to the extent that the partnership agreement does not provide otherwise. The chapter discusses how RUPA continues most of the major policies of UPA, and it explains the differences between the two, such as RUPA's adoption of the entity theory, which allows for a partnership to continue even with the departure of a partner.

In addition, the chapter discusses the Uniform Limited Partnership Act, which set forth the first general statement of the law applicable to limited partnerships. The chapter also examines limited liability partnerships under RUPA.

The chapter concludes with a discussion on the classification of partnerships. It covers trading partnerships, which buy and sell for profit; nontrading partnerships, which engage in a business other than buying and selling for profit; mining partnerships, which are common-law associations that arise by operation of law when co-owners engage in the operation of mining and gas properties; partnership by estoppel, which is a doctrine that prevents a person who holds himself out as a partner from subsequently denying the existence of the partnership; partnership by promissory estoppel, which doctrine prevents a partner who is a party to an unenforceable partnership agreement to deny the existence of the partnership; limited partnerships, which consist of general partners, who control the partnership and have liability as regular partners, and limited partners, who are liable only to the extent of their respective investments in the partnership; master limited partnerships, which have publicly-traded equity interests; and limited liability partnerships, which limit the exposure of general partners to certain kinds of partnership liabilities.

Business Organizations with Tax Planning (Matthew Bender) covers all aspects of the formation, operation, reorganization, and dissolution of important business entities. It features full discussions, with authoritative citations, of federal and state law regarding corporations, general and limited partnerships, limited liability companies, joint ventures, and business and real estate investment trusts. Separate chapters supply in-depth analysis of federal and state taxation as they affect these entities, with useful citations to the Internal Revenue Code, Treasury Regulations and Revenue Rulings. Business Organizations also gives substantial focus to specialized areas of law, including: employment discrimination, antitrust, business torts, products liability, intellectual property, franchising, tax accounting, financial accounting, federal contracting, securities, environmental, and bankruptcy law.


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Chapter 2 covers tax factors in choosing a form of business organization, and includes a discussion on partnerships. For a comprehensive discussion on basic partnership definitions, see Chapter 3. For treatment of the Uniform Partnership Act, the Uniform Limited Partnership Act, and limited liability partnerships, refer to Chapter 11.


For a wealth of sample forms, drafting guidance, and expert legal commentary to assist in the fundamental, and often time-consuming, task of document drafting, see Current Legal Forms with Tax Analysis (Matthew Bender).

For practical discussion on the legal and tax factors to be considered in selecting a form of business organization, including individual proprietorships, general and limited partnerships, closely held corporations, not-for-profit corporations, and limited liability companies, see Organizing Corporate and Other Business Enterprises (Matthew Bender).

For step-by-step guidance concerning the formation, operation, and dissolution of business and non-profit corporations and partnerships, along with complete coverage of important tax considerations affecting corporate practice, see Ballantine & Sterling California Corporation Laws (Matthew Bender).

For comprehensive analysis of the Business Corporation Law, Limited Liability Company Law, and Not-for-Profit Corporation Law, as well as other related statutory provisions, see White, New York Business Entities (Matthew Bender).
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