Fundamentals Of Limited Partnerships

By Author: Jay Butler
Total Articles: 7
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Limited Liability Corporations are actually Companies. In fact, there are no such entities in existence called Limited Liability Corporations. Most LLC's and Limited Partnerships are stand-alone entities and are provided a charging order protection. The charging is the remedy given to a creditor who receives a judgment. What is so ironic is this remedy winds up being acting as a defensive measure! LP's have enjoyed the benefits of the charging order protection under US Supreme Court rulings since 1916. The primary discouragement to judgment creditors is this IRS ruling pertaining to the charging order:

Internal Revenue Service (IRS) Revised Ruling #77-137
For Federal income tax purposes an assignee (judgment creditor) is treated as a substituted partner and, as such, must report the distributive share of partner items of income, gain, loss, deduction, and credit attributable to the assigned interest on assignee's Federal income tax return in the same manner and in the same amounts that would be required if assignee was a substituted partner. Therefore, if a partner interest is subject to a charging order, the ...
... general partner can, and most likely will, withhold all profit distributions in the future. Thus, the creditor's claim will generally remain unsatisfied, which encourages the creditor to either abandon the claim or to settle for a reduced amount. The debtor partner can still receive funds from the partnership/company in the form of a salary, advances, or loans, none of which equate to profit distributions.

Creditors will not be able to even find a lawyer to attempt an outside lawsuit against Limited Partnerships or LLC's, as attorneys have been sued for malpractice by their clients for winning their court case as the client is faced with paying taxes on money they could not collect! For more information on entity formations, be sure to contact the author.

Author Info:-

Jay Butler is an asset protection specialist for an International Business Company in the Republic of Seychelles. Visit their website for more details on favorable countries in which to pursue Limited Liability Corporations and free consultations on how to benefit from creating and using Limited Partnerships. For More Information Visit us at:- http://www.assetprotectionservices.com/