The proposed regulations focus on the member's relationship to the LLC in defining who is a limited partner
for purposes of Sec.
The FLP's partnership agreement should not waive the state-imposed fiduciary duties of the general partner toward the limited partners
A typical limited partnership arrangement involves a general partner, usually a corporation, which carries on the business of the partnership, and several limited partners
all of whom, generally speaking, function as little more than passive investors.
1402(a)2(h), an individual who fails the three limited partner
general tests can still qualify as a limited partner
, under one of two exceptions.
The limited partners
sued the general partners for failing to fulfill their agreement.
If an LLC member fails the general test simply because he or she participates in the partnership's trade or business more than 500 hours during the entity's tax year, the member still may be considered a limited partner
if (1) he or she has only one class of interest and (2) immediately after acquiring that interest
A limited partner
materially participates in the partnership activities only if he meets the first, fifth or sixth tests.
469-5T(e)(3)(ii), an individual who is both a general and a limited partner
in an entity is not treated as a limited partner
In most cases, the limited partners
derive no economic benefit from the investment other than the expected tax benefits.
The limited-partner equivalence test referenced the state of organization rather than the state of operation and was partially designed to exclude professional service LLCs from the benefits of limited partner
Issue: Will the conversion of Dick's general partner interest to a limited partner
interest achieve his goal of limited liability?