Asked by Ak-mu Chelc on Apr 30, 2024
Verified
Development LP is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals, including Ethan. Ethan loses his limited liability if he
A) participates in the firm's management.
B) does not participate in the firm's management.
C) invests in a project that the firm has declined.
D) votes to sell or dissolve the firm.
Limited Liability
A legal structure where a company's owners are protected from personal responsibility for its debts or liabilities.
Limited Partners
Investors in a limited partnership who are not involved in daily business operations and whose liability is limited to the amount of their investment.
Participates
To take part in or become involved in an activity or event.
- Comprehend the effect of involvement in management on the liability of partners within limited partnerships.
- Recognize the implications and conditions under which a partner may lose limited liability status.
Verified Answer
BP
Brandon PearsonMay 02, 2024
Final Answer :
A
Explanation :
Limited partners, like Ethan, maintain their limited liability status as long as they do not participate in the management of the partnership. Engaging in management activities can result in losing their limited liability protection.
Learning Objectives
- Comprehend the effect of involvement in management on the liability of partners within limited partnerships.
- Recognize the implications and conditions under which a partner may lose limited liability status.