Limited Partnerships
Chapters in this video
- 0:00 DPP pass-through basics and limited partnership structure
- 1:33 General partner: unlimited liability and full management control
- 3:22 Limited partner: passive investor with liability cap
- 4:37 Management boundary trap: when a limited partner becomes a general partner
- 5:24 K-1 vs 1099-DIV and passive activity loss rules
- 6:30 Rapid-fire exam recap
What this video covers
- Why a general partner accepts unlimited personal liability in exchange for exclusive management authority, and the fiduciary duty owed to limited partners
- Why a general partner cannot be removed by any single investor, and the specific majority-vote requirement from limited partners
- How limited partners are purely passive investors whose liability is capped at the amount invested plus any recourse debt
- The precise management boundary that causes a limited partner to lose limited liability protection and assume unlimited liability like a general partner
- Why both general partners and limited partners receive a K-1, and why the 1099-DIV is a distractor meant for C corporations, not pass-through entities
- How passive activity rules restrict limited partner losses to offsetting only other passive income, not ordinary wages or portfolio income
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