General partner in partnership has unlimited legal liability

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Reference no: EM131217176

A general partner in a partnership has unlimited legal liability but also has managerial control over the partnership. A limited partner has limited liability but does not exercise control over the day-to-day operations. John, your client, owns a machine shop operated as a sole proprietorship. The business is worth $10,000,000. He would like to transfer a portion of ownership to his two adult children, Cindy and Luke, by converting the business into a partnership. How would you structure a partial transfer of ownership in the business to Cindy and Luke to achieve a fair market value of the transfer that is less than Cindy and Luke’s proportionate share of the $10,000,000 value?

Reference no: EM131217176

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